On my recent trip to China last month, I had a five hour layover in Tokyo on my way back to Detroit. Searching for something to read at the Northwest World Club, I saw two headlines that grabbed my attention. The Wall Street Journal read “Chrysler Makes Bankruptcy Filing” and on Time Magazine it was “Shanghai, the Next Detroit.”
In my years of doing business in Shanghai, I have witnessed both the enormous growth and influence of this coastal city. Nonetheless, it is still farfetched to claim Shanghai the “Next Detroit,” just as it is wrong to declare Shenzhen (in Canton province) the “Next Silicon Valley.” During my visit to the biennial Shanghai International Auto Show, I saw a number of things that might have caused this incorrect connotation to persist, including:
- The show’s size. There are so many automotive OEMs in China now, more than 120 of them. Naturally, there are a lot of cars to see. There are more than six large halls that host domestic and foreign made cars.
- It is not just a show for the OEMs. The automotive suppliers also have their place at this show. There are six halls for them alone. I went to see some of the American suppliers who are my friends there.
- There are a LOT of people. I went there when the show was open for “professionals” only, not the general public. Still, the waves of people made it hard to breathe. There is clearly a lot of excitement around the automotive industry in China compared to the declining number of attendees at the North American International Auto Show held in Detroit each January.
- The overall quality and the appearance of the Chinese made cars seem to have improved quite a bit over the last show.
Even with these phenomena, I have to say that China has a long way to catch up to be the next Detroit (Maybe it does not want to be the next Detroit?) based on this auto show. Here are my thoughts:
- At the end of day, the country or company that creates, owns and protects IP will eventually win in the marketplace. At the Shanghai Auto Show, there are too many blunt copycats. There was a car made by Jeely that is almost an exact copy of a Rolls Royce. Then, there was a car made by Chery that is almost an identical copy of a Bentley. Even the logo is a rip-off copy. Instead of a big “B” in the center of Bentley logo, they have a big “R” for the brand name (Riich). http://www.chinacartimes.com/2009/03/19/new-chery-brands-riich-and-rely-launched/ I believe that innovation is what Detroit has and will continue to have. Look at an innovative company like Apple whose iPod and iPhone conquered the music and cell phone industry because of its creative approach. The hundreds of imitations of the iPod will forever play a catch up game. The same is true in cars.
- The Shanghai show organizers focus on more than just the cars, perhaps to a fault. It is no secret that the attractive models (both men and women) have been a big draw for the show. I find it amusing that all over the show floor there are voting stations to cast ballots for the top model of the show, but I didn’t find any voting for the most attractive car of the show. Here’s a good example of what the show is like: http://home.wangjianshuo.com/archives/20090426_shanghai_auto_show_2009.htm
- At the Detroit Auto Show, I can walk through the entire show without feeling tired. In the Shanghai Auto Show, I was exhausted after two hours and ready to quit. Yet there is no easy way to get out of the show. There are no taxis nearby and all car traffic is restricted around the show location. Even the subway station is a 20 minute walk.
Yes, the Shanghai Auto Show is big and it has a lot to be proud of. Nonetheless, Shanghai is only one of many automotive cities in China. Until Shanghai (actually, China in general) becomes more innovative, focuses further on the quality of the cars, and respects IP, I think it will be a long time until Shanghai can claim to be the car capital of the world.