Challenges to China's Auto Industry

From Xinhua Economic News

BEIJING — China’s automotive industry will face four challenges in the coming few years, said Fu Yuwu, vice-chairman and secretary general of the China Society of Automotive Engineering.

According to Fu Yuwu, the four challenges are:

1. Overcapacity. With the swift growth of output, the impact of overcapacity will begin to show up, making market competition very cruel. The situation will force Chinese automakers to reorient their production toward the world market. Whether or not they dare to do so and whether or not they are able to enter the international — that is a big challenge.

2. Parts and components systems. Independent development has to be backed by a strong parts and components production system. This requires not only high quality that could meet international standards but also economies of scale in production. China’s auto parts and components production is still at a low level with regard to quality and interchangeability.

3. Independent development capability. Without intellectual property right, the sector would be limited in development. It should make efforts to develop its own products while learning from foreign counterparts.

4. Coordinated development between the automotive industry and social development. While auto industry has promoted social progress, it has also touched off some social conflicts, such as safety, energy consumption, environmental protection and the repositioning of the functions of central cities. It cannot go ahead without considering social problems.

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