During the last U.S. presidential election, the movement of American companies manufacturing plants to China was discussed in great detail. Some candidates claimed the movement of these factories removed jobs from the U.S. manufacturing sector in order to produce goods at a cheaper cost overseas before shipping these goods back to the U.S. This policy issue was particularly important to Michiganders as car companies were used as an example throughout the election season.
One basis for this argument finding footing throughout the population was the assumption that the goods being produced by U.S. companies in foreign countries like China were being shipped back for consumption in the U.S. I started this trip with the same assumptions regarding U.S. automakers in China. However, throughout this trip I have learned that many of the cars built in China by U.S. companies are sold in Asia. Due to a 25% tarriff on vehicle imports, imported vehicles from the U.S. are often too expesive to be market competative in China.
With the Chinese population steadily growing in personal wealth, there is a huge opportunity for companies producing in China to increase profits by selling their goods in the Chinese markets. In fact, China is currently consiered to be the worlds largest auto market. Only 4% of China’s 24.4 million vehicle market in 2016 were from sale of foreign-made cars. This percentage has seen little change over the past fifteen years. However, as evidence of the numerous Ford, Chevy, and other U.S. company branded cars I have seen, there is a market and appetite for U.S. cars in China.
Compehensive policy changes are needed in both the U.S. and China for foreign companies to be able to fully serve the market need for U.S. cars here in China. I look forward to seeing how policy changes in both nations affect the market over the next year as another group of Ford School students prepare to visit China in 2018.