Lessons from a Chinese auto-maker

I recently visited one of SAIC Motor Corp's auto-assembly plants on the outskirts of Shanghai. The plant was impressively modern, and was equipped with automatic auto-parts transporters, similar to one I had seen on television at a major German automaker. The level of noise and dust was so negligible that it didn't feel like being in a factory.

Having visited other auto-assembly plants, I was struck by how much more advanced the SAIC plant seemed. SAIC's obviously high production standards and its attendant international success for me highlight the ability of Chinese firms to elevate themselves to the forefront of their global industries. I hope their example raises the aspirations of Thai businesses to become world-class players like SAIC.
 

 Formerly known as Shanghai Automotive Industry Corporation, SAIC has grown from humble beginnings more than 50 years ago, transforming itself from a basic diesel-parts manufacturing company to producing leading global automotive brands from Germany and the US, among other countries. In 2003, SAIC became a Fortune 500 company and in 2011 sold more than 4 million vehicles, the largest output of any China-based automaker, and banked revenue of close to USD 70 billion.
 

 SAIC's origins date to the early years of the Chinese automobile industry in the 1940s, and it was one of just a handful of carmakers in Chairman Mao’s China. Currently, it participates in the oldest surviving Sino-foreign car-making joint venture, with Volkswagen, and has operated a joint venture with General Motors since 1998. SAIC products sell under a variety of brand names including those of its joint venture partners. Two notable brands owned by SAIC itself are Roewe, one of the few domestic Chinese luxury car brands, and MG, an iconic "British" sports car, which the factory I visited in Shanghai was making.

While most of SAIC's plants are in China, it operates a large research and development centre in the UK, which employs around 275 engineers and 25 designers. This acts as the principal site worldwide for the development of MG, and also plays a major role in developing Roewe.

 The success of SAIC is part of the wider story of how far the Chinese auto industry has evolved in recent years. The Chinese automakers' association predicts exports of Chinese-branded vehicles to reach one million this year, 18 percent higher than last year, and some analysts expect a 50 percent increase to 1.25 million vehicles.

 Speed of development is certainly an advantage for Chinese companies - while it normally takes 4-5 years for companies like General Motors or Toyota to develop new cars, their Chinese counterparts can do so in less than 3 years.

 And China has long been renowned for its ability to produce very cheap, no-frills cars - such as Geely's Panda model (with a starting price in China of RMB 40,000 and abroad about USD 6550) - the industry is gradually acquiring a reputation for higher quality and smarter design.

 Among those impressed by SAIC's example is Thailand's biggest agribusiness conglomerate, CP Group. Earlier this year, CP and SAIC expressed their shared interests in forming a partnership to set up a manufacturing base for right-hand-drive vehicles in Thailand for sales in Thailand and export to other markets that drive on the right-hand side of the road.

 It's good to see an already established Thai company with an international presence like CP recognizing the benefits of partnering with a successful Chinese company like SAIC. I would also hope that younger Thai companies seeking international success follow this example.