… was a famous quote of appreciation attributed to Martin Winterkorn, Volkswagen’s former CEO, when closing the door of a KIA sedan at a car exhibition a few years ago. While Mr Winterkorn moved from the boardroom to the court room battling accusations in the wake of Volkswagen’s emission scandal, the automotive world’s attention shifted from the ascent of Korean car manufacturers to their counterparts in China.
Reading through Tom Stacey’s recent ‘China is on course to build the best cars in the world’ article in The Property Chronicle, I couldn’t help but consider what that notion would actually entail. Considering the authors argument of past innovations from safety innovation in Europe (electronic ABS introduced for the 1978 Mercedes S-Class), mass production in the US with Ford’s Model T and (lean) manufacturing excellence first introduced by Japanese carmakers, I was wondering what would drive China’s presumed rise?
The author cited millions of skilled Chinese workers earning relatively low wages. That’s largely correct. Back in 2015, the average worker in China’s automotive sector made just 20% of his counterpart in a German plant. Since then, manufacturing wages in China has increased by more than half, but are still a far cry from European or US levels.