China's Changfeng to Make U.S. Debut at Detroit Auto Show

[HenryTo]

This is being publicisized as a "fact-finding" mission - but I have a feeling that the owner of the Detroit dealership mentioned at the end of the article is being too complacent (as always). Following is courtesy of the WSJ:
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China's Changfeng to Make
U.S. Debut at Detroit Auto Show
By MIKE SPECTOR, JOHN D. STOLL and JEFFREY MCCRACKEN
Staff Reporters of THE WALL STREET JOURNAL
October 27, 2006 5:34 p.m.

DETROIT -- In the latest shot across the bow of U.S. auto makers, China's Changfeng Group Co. will bring four vehicles to Detroit's North American International Auto Show in January. The Chinese company hopes its appearance will jump-start a calculated foray into the North American market.

The trip marks the second time in as many years that a Chinese company will use the largest U.S. auto show to introduce American consumers to its products and gauge reaction. Geely Automobile Co. brought a compact sedan to the show early this year.

Changfeng plans to display four vehicles -- two SUVs and two pickups. The vehicles, sold under the Liebao name brand, are given alpha-numeric names, which have become the norm in the U.S. auto industry. The SUVs are dubbed CS6 and CS7, while the trucks are known as the CY3 and CY6. The vehicles are outfitted with a circular grille badge that looks somewhat like the Lexus logo from a distance. The L in the middle of the logo stands for Liebao, which means "Cheetah."

It is the first time Changfeng will venture to a show outside of China, JianXin Li, the company's chairman, told Dow Jones Newswires through an interpreter. He said the company needs to expand into developed international markets to boost its image in China, where buyers often prefer foreign brands.

While Changfeng doesn't intend to start selling cars in the U.S. until later in the decade, its presence in Detroit sends a message to the assemblage of domestic, European and Asian car companies battling for U.S. market share. When the conditions are right, "we can come to the United States," Mr. Li said.

Changfeng is one of a handful of Chinese auto makers setting sights on the vast U.S. market, which sells about 17 million vehicles annually, three times the amount in China. Geely and Chery Automobile Co. have stated intentions to start selling cars in the U.S. for around $10,000 in coming years in an effort to undercut the existing players in the market, many of which rely on the U.S. car industry for significant profits.

Li downplayed the supposed advantages of large, consolidated auto companies, such as Detroit's Big Three. He said Chinese leaders initially gave too much credence to the concept of a few large corporations dominating the market. He said the Chinese government has more recently allowed droves of smaller companies to compete in a saturated market.

This development suits smaller companies like Changfeng, which currently produces a modest 100,000 vehicles annually and plans to triple its output within five years. Chengfeng plans to export half of its production out of China at that time.

Mr. Li believes Changfeng's small size makes it nimbler and said giant corporations can have efficiency problems. Indeed, the U.S.'s General Motors Corp., Ford Motor Co. and DaimlerChrysler's Chrysler Group all reported substantial losses in the third quarter due to downsizing efforts, production cuts and ballooning labor costs.

But Mr. Li acknowledged any success in the U.S. market will take time. He ruled out rollouts at any other North American auto shows through the first half of next year and emphasized that the Detroit trip would be a learning experience, not a sales pitch. Mr. Li said his company is still ill-prepared to take on established players. "My biggest concern is that we don't know the principles of the game," Mr. Li said of the U.S. market. "We don't really know how to play the game right now."

That game will initially involve getting up to speed on the U.S.'s tough emissions, quality and safety standards, all of which add cost and complexity to vehicle development and production.

"I don't know if we're going to see them by the end of this decade quite frankly," said Bob Thibodeau, a Detroit auto show official and owner of a large Detroit-area Ford dealership. "At least for right now, they still have a lot of work to do from what we can tell," he said, referring to meeting federal standards.

But Mr. Thibodeau expects a warm reception for the Chinese company this January, much as Geely had a year ago.

Write to Mike Spector at mike.spector@wsj.com, John D. Stoll at john.stoll@dowjones.net and Jeffrey McCracken at jeff.mccracken@wsj.com