Shanghai Auto Show – A sea of people

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Auto Shanghai 2009 officially ended over two weeks ago. On the final Saturday I had a few remaining parts suppliers to visit and as a result had the distinct privilege of attending what was without a doubt one of the most crowded exhibitions I have ever visited anywhere. People were just wall to wall. Then it struck me: this massive sea of people are all potential customers.

It was truly an experience that I would have loved to miss and yet at the same time I am glad I was able to see and experience it with my own eyes (and elbows). The enthusiasm the Chinese public enjoyed just visiting an auto show is something very foreign to the average westerner, even to me after 22 years in China.

It is impossible to put into words the automobile phenomenon in China today.
Less than ten years ago the idea of owning a car for personal use was literally a fantasy for the average Chinese middle class consumer. Today this fantasy is becoming a reality for millions upon millions of people. Owning a quality automobile is becoming a required status symbol in modern day life in China.

This type of euphoria has long been forgotten by most of the population in the West. Imagine if you will the idea of growing up in the 1930s in the midst of a depression, then in 1945 returning back home and experiencing the economic expansion which the USA and UK enjoyed. Before the war the idea of owning a car was purely for the ultra-rich. Transportation for the average consumer was limited to trains, buses, trolleys, horses and an occasional bicycle. The USA automobile boom started in the fifties and sixties with new designs and new growth which nobody could have predicted in 1940.

In this light you might be able to imagine the economic expansion China began waking from 16 years ago. ‘The Great China Depression’ lasted from 1820 until 1992 when Deng XioaPing made his trip south advocating Communist capitalism. The China Automobile Boom started in 2004 after President Hu took power.

What we are seeing today is just the tip of a huge iceberg. In USA automobile industry history terms you might compare China today with where the USA was in 1953. It will still be a few years until the Chinese build the equivalent of the ’57 Chevy. Yes, the Chinese are spending a great deal of energy to learn from the experience of others (i.e. copying) but they are also learning very quickly.

Western automobile executives should not take comfort when they read about the Geely GE and think all the Chinese know how to do is copy. If the Chinese are good at anything it is lowering the cost of manufacturing when they increase volumes. The Chinese will are already developing their own engineering capabilities and will very quickly develop their own home grown grand slam. When they succeed they will do so in terms which will dwarf the success enjoyed by the Model T and the VW Beetle and make Tata look like a joke.