I’d hate to see their shipping bill

This is different: China has tried and failed to build sophisticated auto engines, so they’re buying a huge engine factory in Brazil, which they will break into bits and ship back to China, where it will be rebuilt. And voila, China can lay claim to building state-of-the-art car engines.

China is pursuing a novel way to catapult its automaking into a global force: buy one of the world’s most sophisticated engine plants, take it apart, piece by piece, transport it halfway around the globe and put it back together again at home.

In the latest sign of this country’s manufacturing ambitions, a major Chinese company, hand-in-hand with the Communist Party, is bidding to buy from DaimlerChrysler and BMW a car engine plant in Brazil.

Because the plant is so sophisticated, it is far more feasible for the Chinese carmaker, the Lifan Group, to go through such an effort to move it 8,300 miles, rather than to develop its own technology in this industrial hub in western China, the company’s president said Thursday.

If the purchase succeeds — and it is early in the process — China could leapfrog competitors like South Korea to catch up with Japan, Germany and the United States in selling some of the most fuel-efficient yet comfortable cars on the market, like the Honda Civic or the Toyota Corolla.

You can never fault the Chinese for lack of ingenuity or business acumen. I give them credit for recognizing their shortcomings and finding an innovative solution. Read the article for details on why the cars they’re building hold such strong appeal, and why carmakers everywhere else should be sweating bullets as the Chinese manufacturing juggernaut prepares to pulverize them.

The Discussion: 10 Comments

I recall the soviet Union doing the same with factories in Germany, though they didn’t pay for them of course.

February 17, 2006 @ 1:52 am | Comment

“carmakers everywhere else should be sweating bullets as the Chinese manufacturing juggernaut prepares to pulverize them.”

I wouldn’t talk China up too much if I were you. It’s got a LONG way to go, and people won’t buy Chinese cars on price alone, which kills pretty much their main advantage rigth now.

Look at your history. It took Japan the best part of a decade to sucessfully muscle in on the US auto trade, and even then it was largely due to the ‘luxury extras’ like rear wipers and fitted stereos etc that attracted people to Japanese cars in those days.

Even if China does get into gear, it won’t be aiming at ‘traditional’ US markets like SUVs and pickups or muscle cars, it will be making small cars and family cars, which will compete with Japanese and Korean imports, but not with most American manufacutrers.

February 17, 2006 @ 1:59 am | Comment

Have you read China Inc.? Manufacturers everywhere are sweating bullets over the China jugernaut. It may take time – no one ever said it would be overnight. But read the article and see the extraordinary progress Chinese automakers have enjoyed. Remember too, “Made in Japan” used to connote cheap, not-so-reliable massd-merchandised junk. Then in the 70s it came to connote superior engineering, reliability and overall excellence – at lower than US prices.

Meanwhile, America motorists are becoming increasingly interested in fuel-conserving cars, which is exactly where China seems to be specializing. As always, we’ll have to wait and see.

February 17, 2006 @ 2:26 am | Comment

Yes after the war the Russians did the same thing with the Zeiss Ikon precision optics and camera manufacturing plant in Dresden. They shipped it by train, complete with technicians to Kiev where they reassembled it and started building Contax cameras (then the best in the world) underthe “Kiev” brand. Of course, as soon as the German technicians went home, the quality plummeted and by the 1970s they were dumping whole manufaturing batches straight in the local garbage tip. I have both a German Contax and a Russian Kiev. Same design, but only one works properly.

February 17, 2006 @ 2:54 am | Comment

I don’t get it. Auto factories are VERY specialized. They have machine tools that are set up to make one type of part on one type of engine.

Does the design of the engine come with the factory? If not, what value does the factory have?

BTW, I’m pretty sure that this is the same engine that is in the Mini Cooper. BMW is abandoning this engine for one made by someone else (one of the French carmakers, I believe). So it is not unreasonable to think that the car engine comes with the plant. It is just unlikely, I think.

If it is the Mini engine, it is hardly a worldbeater of an engine. SOHC 4 cylinder, makes about 116 hp or so from a 1.6L, if I’m not mistaken (there is a more powerful supercharged version in the US).

February 17, 2006 @ 9:50 am | Comment

Buying the plant means they couldn’t figure out how to steal it.

February 17, 2006 @ 10:04 am | Comment


The article says the engines made at that plant are currently being used in Mini-Coopers but BMW is switching to a engine made by Peugot. Chrysler used to use these engines in the Dodge neon but have also moved on. So it appears the engines from this plant are not really that advanced and are actually being phased out and that’s why the plant is being sold.

I don’t think this is any sort of giant leap for China’s automotive industry overall (there are already many very modern engine plants in China ran by the big state-owned automakers and JVs), but for the Lifan group — a privately held motorcycle maker with no previous experience in car engines — this is a big step.

February 17, 2006 @ 4:05 pm | Comment

“Auto factories are VERY specialized”

Auto plants are basicly a set of presses, molds and machine tools.

If you change the templates that they use, you change the vehicles that they produce.

What China is buying is the infrastructure. They can put their own domestic plates etc in and change the plant around in no time.

February 18, 2006 @ 9:38 am | Comment

A large percentage of the auto parts in American cars are already made in China. How long would it take before the Chinese gain the capability in putting them all together?

Since the trend is moving toward fuel efficient autos, the Chinese have an edge, if they can put together good quality cars.

February 18, 2006 @ 12:05 pm | Comment

people won’t buy Chinese cars on price alone

Foreign cars that Americans initially purchased for price alone:

Le Car

Some of these brands made it, some didn’t, but the point is that recent experience shows that there actually are plenty of Americans who buy cars primarily on price point, regardless of suspect quality or national origin.

February 22, 2006 @ 12:48 am | Comment

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