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Ford looks to expand Chinease Market

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    Gordon Chang discusses China's car market and Ford's plans

  • Duration 4:01
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Gordon -- here now author of nuclear showdown North Korea takes on the world.

And Gordon this -- foreign car companies seem to be tried harder and harder to get into the Chinese car market why is that.

Well people see in China and say it's the world's largest car market and so we've actually think it's gonna get bigger.

But that's not necessarily true mean we saw a torrid growth in 2009 and 2010.

You know 3050%.

Growth.

But last year was really down about 5% 6% growth this year the official estimate is nine point 5% growth but analysts are saying.

The market at best is going to be flat it started out really badly in January car sales were down 23 point 8%.

And of course Lunar New Year holiday affect of that but the it's the result was so much worse than people expecting.

And so how does this new.

Proposal by the Chinese Government -- fact that.

Well clearly what they're saying is they're gonna try to keep their domestic car market to domestic.

Chinese manufacturers.

Because what they're saying is look.

There's 412.

Brands that state agencies you know state enterprises governments could -- Of those 412.

Brands that they can -- Zero our foreign.

And right now this is a big deal because.

Basically states the state agencies.

80% of what they -- our foreign cars so that's gonna go from 80% to 0%.

If the ministry gets his way that the percentage of cars that the Chinese that the government -- vs what this -- Chinese know -- if it isn't what but it is pretty small percentage of isn't really that big a factor.

Well it is a small percentage it's it's somewhere maybe 1020%.

-- how you calculated.

But the point is that it is a very lucrative segment so for instance forty Mercedes-Benz.

-- GM with his Buick brands do very very well on big cars with lots of margin.

So taking that away from foreigners -- it wants is going to be a really big deal and and this is just part of a broader narrative of the Chinese Government trying to reserve all of these domestic opportunities for state enterprises and it's not only foreigners are getting hurt it's also private domestic entrepreneur -- So this is a real problem because Chinese Government is sort of closing itself off.

You know we had 35 years of reform and opening up.

Well that's over -- you know there's no reform on bounces a reversal of reform.

And we have the Chinese Government closing itself off from the rest of the world I mean what could be worse I think it's interesting that you say that in effect there their private businesses -- as well how does that.

Well essentially the Chinese economy.

Really grew during the reform -- of the last three decades because of the creation and the development of the private sector.

So you had these these small mom and pop businesses they grew to be world class size organizations.

But they've been feeling the heat over the last 23 years because the Chinese Government has been sort of trying to dry up the financing for them which really cripple them.

In the number of other things to try to get the business to state enterprises.

So you have state enterprises trying to close the economy out from everybody else that really means less opportunities for everyone.

So the things that really made China great you know the gold from the DA -- everything that lay all the golden eggs well.

That's they're just killing in -- this is such stupid policy.

And sell.

Ford is sort of one of those companies that's really going full steam ahead in trying to get involved in China so how all of this.

Affect sports specifically to -- I understand that it primarily affects the luxury brands more so than others.

I think it will affect the market leaders it's you know Ford got in late and for some good reasons -- -- -- -- -- but it really is not a big factor right now pretty small part of the overall market and they don't sell -- luxury cars to the state agency Lincoln is that luxury brand and that's not SI and let's not really in China -- and so you know it's it's more like PO Volkswagen's all it will get -- Mercedes-Benz will get -- viewers will get hurt.

Because in this.

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