WCA September 2008

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Wire & Cable ASIA – September/October 2008 28
commodities throughout the world. American officials said
that Mr Paulson rejected the charge, saying that high oil and
food prices reflected an imbalance in supply and demand
for both.
The two sides did agree to meet again. In preparation for
this, they are to set up a framework to discuss environmental
and energy cooperation, specifically to improve joint efforts
on clean air, water, energy generation, transportation
and conservation.
Some genuine advances in Chinese-American relations ❖
❖
were reported the day before Mr Paulson spoke at
Annapolis, at a signing ceremony in Washington
hosted by the US Chamber of Commerce. Chinese and
American businesses announced $14 billion in new
deals: $8 billion in Chinese investments and purchases
in the US, $6 billion in American purchases and
investments in China. Among the US companies signing
deals were Chrysler, Ford and General Motors (engines);
Motorola and Qualcomm (telecom); and IBM, Cisco
Systems, Sun Microsystems and Texas Instruments
(semiconductors and electronic components).
Of related interest . . .
China is the most popular destination for foreign ❖ ❖
industrial investment in the world, attracting almost
$83 billion in 2007. But, with wages in China rising
close to 25% a year in many industries, in dollar terms,
greater numbers of multinational corporations already
active in China are establishing or expanding Asian
bases elsewhere. The strategy that analysts call “China
plus one” enables a company to reduce the risks of
overdependence on factories at a single site. Favoured
destinations for American and other multinationals
with existing capacity in China are Vietnam, Thailand,
and North Korea. If the trend accelerates, it could mean
further losses to Asia of manufacturing in Mexico and
Central America.
According to the editor of the emerging markets ❖ ❖
newsletter Silk Road Investor, impending improvement
in relations between China and Taiwan will help increase
Chinese power in Asia and diminish American influence
there. Yiannis G Mostrous wrote (29th June) that China’s
undertaking of “a more nuanced approach to diplomacy”
with Taiwan – raising prospects for an easing of tensions
and better economic ties between the mainland and
the island – favours this outcome. Taiwan, too, stands
to gain from the evolving political landscape in Asia,
according to Mr Mostrous, who said, “both sides seem
to recognise the value in smoothing the fractious
relationship.”
Automotive
In a first, Asian auto makers outsell
Detroit’s Big Three
As reported on 4th June by Autodata Corporation, General
Motors, Ford Motor and Chrysler, taken together, accounted
for a record low market share of 44.4% in May, compared
with 48.1% for ten Asian brands sold in the US. Toyota
Motor, of Japan, pulled to within 10,000 vehicles of
overtaking GM’s sales in the United States.
Honda posted its highest monthly sales total ever in May,
and the Honda Civic – a compact available with either a
hybrid or a gasoline engine – displaced the Ford F-series
pickup truck as the month’s best-selling vehicle. Honda’s
midsize car, the Accord, and two Toyota sedans also outsold
the F-series, whose sales dropped 33%.
US vehicle sales across the board weakened in May as
ever-higher gasoline prices continued to dampen the
market. Total sales fell to 14.27 million units, their lowest
monthly level in ten years and down from 14.4 million units
in April. The May total was down 13% from May 2007.
Across the industry, sales were down 14% for the month.
Even Toyota posted an 8% decline, although its market
share increased.
Chrysler and China’s Great Wall Motor
Company explore an alliance
Chrysler LLC on 4th July announced an understanding with
China’s Great Wall Motor Co whereby the two firms will
study the possibility of a sharing arrangement. The smallest
of Detroit’s Big Three auto makers already has a deal with
China’s largest independent producer, Chery Automobile
Company (Wuhu, Anhui Province), to produce a low-cost
model for sale under the American company’s Dodge brand.
The pursuit of foreign partnerships reflects Chrysler’s hope
of raising its sales abroad, especially in the fast-growing
Chinese market.
Chrysler and Great Wall will consider ways to use
each other’s distribution networks and component and
technology capabilities, Chrysler said. A statement released
in the US quotes spokeswoman Shawn Morgan as saying
the agreement “represents part of Chrysler’s ongoing
efforts to explore opportunities to expand the company’s
involvement in the development of China’s auto industry,
as well as growing Chrysler’s global business through the
right partnerships.” For their part, Chinese producers are
looking overseas to gain expertise for their technology and
marketing. Great Wall, based in the city of Baoding, west of
Beijing, is best known as a producer of sports utility vehicles
and trucks but is expanding into cars.
Chrysler (Auburn Hills, Michigan) reported sales for the first
five months of this year down 19% from the same period of
2007. The company has been obliged to deny rumours that
it is close to seeking bankruptcy court protection.
In other news of Chrysler, in response to the drastic ❖ ❖
slump in domestic demand for large vehicles, the
company said in June that it would close one of its two
minivan plants and reduce output of its long-awaited new
pickup truck. Both plants affected by the announcement
are in Fenton, Missouri, near St Louis. The minivan
plant, which opened in 1959 and was closed for several
years in the early 1990s, is to be idled “indefinitely,”
suggesting no expectation that it will reopen. Chrysler
is operating some plants on overtime to build more of