Nissan Motor, the biggest Japanese automaker in China, is to build a 5 billion yuan ($785 million) plant in the Northeast China, a person with knowledge of the plan said, extending its reach in the world’s largest auto market.
The plant, in Dalian city, is part of Nissan’s 30 billion yuan investment in China by end-2015, vying with General Motors and other global automakers also looking to the emerging Asian giant for growth as more developed markets stutter.
It also illustrates how the big foreign carmakers are now venturing on to each other’s turf in China to broaden their appeal. In the past decade, foreign brands have carved up China into five territories, building fiefdoms based on their local partnerships. That’s now changing as the rivals set up camp in each other’s backyard.
Volkswagen has been strongest in East and North China through its tie-up with domestic leader SAIC Motor Corp and FAW Group, leaving the southern market mostly to Japanese rivals. But the German brand is building its first plant in Guangdong province in the south. It said in November its market share in the south had risen to 15.8 percent from 12 percent two years earlier.
Similarly, GM, which has been making cars for more than a decade in Shanghai, recently unveiled plans for a greenfield facility in the central city of Wuhan, a Nissan stronghold, and Ford Motor is venturing outside its southwest ‘base’ to build a plant in Hangzhou, near Shanghai and GM’s patch.
A production base in Dalian, the wealthiest coastal city in the northeast, analysts say, would give Nissan easy access to a regional market where Volkswagen and Toyota have been making their Jetta and Corolla models for years.
“Nissan will become a major rival for Volkswagen and Toyota in North China with the new plant. It will be cheaper and faster to ship parts to Dalian compared to Wuhan as Dalian is a major port city not that far from Japan,” said Sheng Ye, associate research director for Greater China at consultancy Ipsos.
Technology, labor productivity, and incomes have advanced much more rapidly in industry than in agriculture. A report by UBS in 2009 concluded that China has experienced total factor productivity growth of 4 per cent per year since 1990, one of the fastest improvements in world economic history.
China’s increasing integration with the international economy and its growing efforts to use market forces to govern the domestic allocation of goods have exacerbated this problem.
China reiterated the nation’s goals for the next decade – increasing market share of pure-electric and plug-in electric autos, building world-competitive auto makers and parts manufacturers in the energy-efficient auto sector as well as raising fuel-efficiency to world levels.
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The Regional Comprehensive Economic Partnership (RCEP) could eventually usher in an era of much deeper regional integration: for corporates doing business in the region, their future success may well hinge on how adeptly they manage to navigate the evolution of Asia’s trade landscape under the RCEP.
Last month, 15 countries in the Asia-Pacific region – including the 10 member states of the Association of Southeast Asian Nations (ASEAN) as well as China, Australia, Japan, New Zealand, and South Korea – signed the landmark Regional Comprehensive Economic Partnership (RCEP) on the final day of the 37th ASEAN Summit.(more…)
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