As two Chinese automakers lay out plans to begin selling their cars in North America, some North American suppliers may be finding that the business pipeline flows both ways.
For years, auto suppliers and automakers from North America and Western Europe have been moving into China through joint ventures and wholly owned subsidiaries to build cars and car parts for a booming consumer market there.
Suppliers also are turning to China to make parts to be exported for cars made in Europe and North America.
Now two independent Chinese automakers - Geely Holding Group and Chery Automobile - will be bringing entire cars to North America and marketing them to buyers seeking inexpensive transportation options.
``It won't have satellite radio or [Global Positioning System navigation], but it will have the ability to transport families safely and efficiently for 10 years or more,'' said John Harmer, vice president and chief operating officer for Geely-USA Inc., during a Jan. 9 news conference at the North American International Auto Show in Detroit.
Geely, based in Hangzhou, China, had a high-profile presence at the event, marking the first appearance by a Chinese automaker - although it lacked the glitz and glamour of its potential rivals. The company had a small space in the lobby at Cobo Hall, rather than inside the main expo room. Its location placed it near the front doors but under a bird's nest, resulting in frequent cleanings for the silver 7151 CK passenger car Geely was showing, Harmer noted.
The 7151 would not even pass existing safety and emission standards in North America, he said, and it lacks much of the style consumers here expect, even for a car that Geely aims to sell for less than $10,000.
But Geely founder and Chairman Shufu Li pledged that the car will meet every standard by 2008, when he expects it to hit North American showrooms.
To do so, Geely and Chery - the Wuhu, China-based carmaker that entrepreneur Malcolm Bricklin wants to bring to North America - may have to tap into a global auto supplier network, said Craig Cather, president and chief executive officer of CSM Worldwide Inc., a Farmington Hills, Mich.-based consulting company.
``What you're going to see is, if Geely wants to sell vehicles in this market, they will have to look at quality issues and look for suppliers who can produce to the levels of North American customers,'' he said.
That is similar to the path taken by Seoul, South Korea-based Hyundai Motor Co. when it laid out its plans to begin selling in North America, he said.
``There will be opportunities for American, Japanese and European suppliers to be suppliers to these emerging customers,'' Cather said.
And that is part of the reason suppliers are positioning themselves in countries like China, India and Russia - all part of an expected global growth spurt in auto production and one that plays into an expected need for companies to diversify their customer and global manufacturing bases.
``We are not going to low-cost countries just for cost,'' said Jose Maria Alapont, chairman, president and chief executive officer of Federal-Mogul Corp., based in Southfield, Mich. ``We are going because there are 48 million Chinese who will be able to drive and only 5 million cars being produced today.''
Alapont noted during a Jan. 18 discussion on supplier strategies at the Automotive News World Congress in Dearborn, Mich., that 89 percent of future automotive production growth globally will come from emerging markets like China and India.
It is not easy to establish a presence in those markets, however.
China has 100 companies calling themselves automakers. There are 39 suppliers of sealing systems alone, noted James McElya, chief executive officer for Novi, Mich.-based Cooper-Standard Automotive Inc., which has four plants in China producing rubber and plastic extruded seals.
So far, global players such as General Motors Corp., of Detroit; Volkswagen AG of Wolfsburg, Germany; and Hyundai have been the biggest players in China through joint ventures with regional automakers such as Shanghai Automotive Industry Corp. and First Automotive Works of Changchung, China.
But independent players like Geely and Chery are increasing sales.
Geely has set a target of selling 25,000 vehicles in North America alone in its first year on the continent - climbing to 100,000 by its fifth year in North America.
``We're confident we can go head-to-head with anyone,'' Harmer said. ``We're not at all afraid of the competition.''