8/1/2008 | 2 MINUTE READ

Insider: China: Enormous Threat or Tremendous Opportunity?

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U.S. OEMs and suppliers must pay close attention to what's happening on the other side of the Pacific if they want to survive in this ever-changing world.


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Our nation is at war. This war isn't being fought on foreign soil, but right here at home and most Americans seem to be paying little attention to it. The recent housing crisis, rising fuel prices and the weakening U.S. dollar have been dominating the headlines of late, but there's an underlying battle that's been strangely missing from the front pages: The war on U.S. manufacturing-particularly centered around the U.S. auto industry.

GM, Ford and Chrysler have been making drastic cuts to survive in this crippling marketplace, shuttering truck factories that were once licenses to print money, scrutinizing the vitality of brands and vehicle models, while at the same time sending thousands of engineers, designers and marketers packing as their market shares sink.

Blame comes easy at times like these: management failed to see the crisis coming, even though many experts were predicting what has happened; consumers overextended themselves to the breaking point; the government turned a blind eye to taking steps aimed at limiting the depths of the economic slowdown. Assigning blame, however, isn't going to do anyone any good; proactive initiatives are needed.

Action is essential because this latest battle may be a prelude to another theater in the war that could be more detrimental to the survival of the U.S. automobile industry: the coming onslaught from China. While most experts agree that Chinese automakers still have a way to go to develop high-quality products that meet the requirements of U.S. consumers, it's only a matter of time before they gain the expertise they need to take America head-on-predictions are that by 2015, at the latest, we could see Chinese cars populating the U.S. market (that's only two vehicle development cycles away), although not in dramatic volumes. Still, those early forays could eventually lead to an onslaught that could leave American manufacturers in retreat.

But it doesn't have to be that way. The industry must take steps now to prevent further erosion that could come from China's shores. It is imperative that U.S. manufacturers and suppliers look at ways for America to take advantage of China's growing market from our own shores, where the workers are among the most efficient in the world. Our government, in concert with the World Trade Organization, must press Beijing on further reducing automobile and auto parts tariffs and demand that Chinese companies be held to the same copyright and patent protection laws as U.S. and European firms.

If we look at China as an opportunity, and not a threat, we might be able to find that America can help build China's middle class and provide the building blocks for its citizens to become richer and more successful. This, in turn, could provide the foundation for the U.S. to supply Chinese consumers with more high-end products and technologies that could, in turn, benefit our economy, as well as theirs. If we fail to see the silver lining and look at China simply as a threat and cower into the corner, we're likely not only to negatively impact our own economy and survival, but also those of other powerful nations who rely on our consumerism and wealth to drive their growth. With a focus on American ingenuity and innovation-developing cutting edge powertrain systems, producing biofuels from waste, and leading in the developing of new chassis and material technologies-U.S. automakers and suppliers can assure their longevity far beyond the arrival of Chinese vehicles into our market.

The line in the sand is getting drawn, which side does your organization plan to be on?