I decided to post on some really significant events in China – events that have had or are having an impact on a huge number of people – i.e. on most Chinese.  So what are those events you would ask?  Well, here we go

Number 1:  The famous Volkswagen SANTANA that all of us China hands have seen on the streets of various Chinese cities and villages, ridden in by ways of a taxi ride, is having a new look – after 29 years of production !!!  Can you imagine this?  a car model that has survived as a selling vehicle for 29 YEARS!

I looked hard through my photo database and could not find an image — big surprise — sometimes I feel the ubiquitous taxi is in each of my photos from Beijing or Shanghai….. At any rate, since I could not find one quickly I found an image of an old one on the web, and here it is:

And here it is (below) the new look of the next generation SANTANA:

Number 2: China and the US are in trade talks again.  Now that the new Chinese leadership is in power, one can wonder what impact that will have on the next iteration of China-US trade relations…

Here are some commentaries from the BBC:

These talks are happening at the same time that China is searching for ways to reduce its reliance on exports for the foundation of its economic growth and the country's focus on propping up the middle class — the growing set of people capable of becoming solid consumers and drivers of economic growth for the country.

This is also a time when China is focusing increasing effort on improving its urban planning — based on statistics I have seen in the Chinese media, the urban population of the country is finally exceeding the rural one — with this change over occuring in 2012.   By some predictions China will have 70% of its population living in major urban areas by year 2030 — this is a very big deal as the country has to figure out how to build cities with stable and functioning infrastructre (think about the floods and drownings that happened in Beijing just a few months ago) to support such urban growth.

Oh, well, I think the Chinese government will come up with a solution — not sure it will be the most "elegant" one but it will be there… Thoughts?

There have been a number of reports in the last several months about the fact that 2012 will be a record year for China's Overseas Direct Investment.  Per Zhang Yansheng, secretary-general of the Academic Committee of China's National Development and Reform Commission, China's overseas direct investment (ODI) has grown at a rate of 40+% annually between 2006 and 2010.   Here are some of the main points that Xinhua News agency summarized from recent Chinese Government directives:

At the same time there are reports showing that the ODI is not all smooth sailing for the Chinese investors.  Per report published by People's Daily,   "By the end of last year, China suffered a net loss of $26.8 billion in overseas investments," said Zhou Zhongshu, vice president of the China International Council for the Promotion of Multinational Corporations, at a Beijing conference in late June 2012.

One example of this is the investment Geely Automotive made in Manganese Bronze – the manufacturer of London's well known taxi cab vehicles…..Now you can see those on the streets of Beijing…Here is one (courtesy of Shanghai List)

Now, the key question is "Why the strong growth of investments?"  In my view this is very heavily driven by the strategy of the Chinese companies and Chinese Government to build up its Intellectual Property (IP) portfolio –  no better way to do so.   The ODI and M&A activites are adding significant access for the Chinese entities to both European market and IP rights which in the future will provide nice platform for expansion into the global market.

Anyone like Electric Vehicles?  Anyone like millions of electric cars?  Oh, no….too many questions.  Well, that is how it feels in the last couple years based on multitude of announcements from many car companies around the globe.  China has been especially focused on the technology and electric cars specifically.  Between 2009 and 2011 there have been many announcements from manufacturers that drove announcements to support also China's government plans for rapid growth in the direction of clean vehicles.

Here are several of them

From the Guardian China is aiming to put more than a million electric vehicles onto the road each year by 2015, according to the state-run People's Daily. It claims that new plans for the auto industry are about to be published and will make "new energy" – electric and hybrid electric – vehicles a national priority.	From the New York Times: TIANJIN, China — Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and buses after that.
From Wall Street Journal SHENZHEN, China — It would seem like a lousy time to get into the car business, especially if you're a little-known company in the developing world. No start-up has grown into a major auto maker in at least half a century. Wang Chuanfu, the founder and chairman of BYD Co., 1211.HK -0.65%a Chinese battery and car maker, thinks he's got a shot.	And here you can find a special report on Electric Vehicle Charging Stations — please see at this link
One of the Key Players in the Electric Car manufacturing push in China is BYD — Link to their Web site	BYD Electric Car

So these were the big plans — reading through the articles above you can see all sort of big plans — build and sell up to 500K electric cars per year in China by 2015

Subsequently ramp up to 5M vehicles per year by 2020!!!  So very ambitious plans no doubt. 

The reality today is VERY DIFFERENT — BYD has apparently sold only 300 taxis and 200 electric busses in Shenzhen.  So WHY is that?

The answer is actually closer to being simple than you think.   All in all electric cars are VERY expensive.   According to some estimates BYD's vehicles will have to drop 40% in price before they become a real alternative to fuel powered vehicles….And then there are many other hurdles like life of batteries' sizes, weight and reliability…

So all in all this has been a bit of a PR disaster since the promise of electric vehicles, green and energy use reductions, were made so public and garnererd so much attention that rebuffing now will be a problem by itsel                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

In conclusion — is the idea still valid?  YES (resounding)!!!   The big question is - when will these costs etc go down so we can all buy an electric car and be NICE!