Western car manufacturers are still in the process of recovering the recession in the United States. As such, they put their focus in mainland Asia’s biggest market, China that resulted in an increase of 78% in business compared in about the same month last year.
Car sales are running at about 14 million yearly, while before it was only roughly about 9 million. So did you see that figure? It only indicates one thing – tremendous increase!
But still, doing business in China gives Western executives a whole lot of headache. It still contains plenty of obstacles as several events have shown. Apart from trade disputes and cultures, one of the biggest issues Western manufacturers is the Intellectual Property Rights issues. Although IPO itself contain scary language, the paragraph in China is even scarier that includes:
“Impediments to the flow of foreign exchange capital payments and receipts”
Companies are barred from withdrawing their profits from China and are forced to reinvest in the country.
“Additional regulation of rechargeable batteries, which may reduce our ability to sell in certain markets”
Batteries are essential for cars to run. Perhaps China wants it free or at the very least lowering down the cost or providing longer warranty. This regulation protects the home team.
“Longer payment cycles and potential difficulties in collecting accounts receivable”
More than 30 days payment terms. So it would be very difficult for companies to run back working capital.
The Chinese car market is a free for all market. There are over 90 local and foreign brands that offer about 400 different car models. Topping the list of the manufacturers is Volkswagen (1st). And oh, did I ever forget to mention the stolen designs? I am sure that there are a lot of it in the country!