All revved up for China

BACK in 1991, China was making about 600,000 cars a year. Most of these were taxis or for the use of senior government officials.

It was a time when the concept of individual car ownership was unheard of.

But last year China made about 13 million vehicles and this year will produce even more.

It is now the largest vehicle producer and seller in the world, surpassing the US last year.

It was also in 1991 that Melbourne-based car component manufacturer Air International decided to make its move into China with car airconditioning units.

Its success over the years, most recently through parent company Futuris, which is in turn owned by Elders, puts it in the position to confidently say that now is the perfect time for Australian companies to get their act together and start talking to the Chinese.

"We're a small Australian manufacturer that made the decision a long time ago to go into the more difficult markets because our competitors wouldn't go there," said Futuris's Bruce Griffiths.

"In 1991, the Americans weren't there, the Europeans were just looking. But after a couple of false starts, in 1995 we signed a 50-50 joint venture partnership with Shanghai Aerospace and it still stands today."

In 2005, Futuris entered another joint venture, with Chery, one of China's top five car makers, and in 2007 it opened its first car seat-making facility in Wuhu, in Anhui province.

Last year, production in China of Futuris car seats outstripped production in Australia for the first time.

"China is now the automotive powerhouse," Mr Griffiths said.

While there are at least 130 individual car makers in China, many with multiple plants, Mr Griffiths said he was aware of 384 more companies that had started electric car projects.

"This is a unique opportunity. We are one of only 12 countries that can design and build a car from scratch," he said.

"We have a tiny market, but we've built a capability and technology that the Chinese want."

Australia's Trade Commissioner in Shanghai, Christopher Wright, said companies making components or which were technology-driven could tap into this burgeoning industry.

"The automotive industry is capital-intensive and setting up a plant can be expensive," he said.

Major car maker Geely has all its transmissions built in Australia because the use of sophisticated technology made it more efficient and cost-effective, Mr Wright said.

Mr Griffiths said Australia's expertise in design and technology was welcomed in China because Australia was seen as non-threatening.

"It's not a big-product competitor as the Americans and Japanese are. It's a safe place for co-operative investment and we're trustworthy," he said.

Mr Griffiths said China's history of stealing technology needed to be dealt with from a new perspective.

"Technology is no good if you don't have a market and China is the biggest market in the world. They've stolen a bit of mine but we sorted it out. I let them have it and then we did even more business," he said.

The Herald Sun