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China Is Coming -- Is Detroit Too Freaked Out?

Friday, 12 Jan 2007 | 11:04 AM ET
Source: www.islandreefjob.com

The headline on the Detroit News on Monday was big and bold. So bold, it caught my eye as I walked through the lobby of the hotel where I was staying. "China Is Coming" it read.

The message was clear in a city that has watched thousands of jobs and billions of dollars disappear over the last 20 years because of foreign competition. If Michigan automakers thought the growth of Toyota , Honda and Hyundai were scary, they ought to worry about how quickly the Chinese will pick up sales in America. After all, the Detroit 3's market share was down to 53% at the end of last year. How much further might it slip once Chengfang Motor starts selling cars in the U.S.? Perhaps as early as 2010?

I understand the concerns for the Detroit's auto workers. But there are a few things to keep in mind. While Chengfang, Geely, Chery Great Wall and other Chinese automakers want the cache of selling cars in the U.S., they are still years from being ready to so. There are dealerships and distribution networks that need to be set up.

Source: www.islandreefjob.com

But more importantly, American's should remember the Chinese automakers are still a ways from building the kind of quality cars and trucks we want in this country. The fact is, China's automakers are still several years from being ready to sell vehicles in the U.S. And on top of that, the Chinese automakers are moving as fast as possible to meet demand IN CHINA, which is growing faster than almost any other large market, except perhaps India.

So instead of freaking out and fearing the loss of sales on the low end, the people in Michigan should keep the threat of Chinese automakers in perspective. Yes, the latest Asian competitors will learn quickly to improve quality, market to Americans, and grow sales in the U.S. But, the domestics have the capacity to be ready for that threat by making high quality, low priced cars.

Yes, the Chinese are coming. But it's not happening tomorrow, and the Detroit 3 and their customers should realize they have technology and skills to fight the Chinese threat.

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  • Phil LeBeau is a CNBC auto and airline industry reporter based in the Chicago bureau and editor of the Behind the Wheel section on CNBC.com.

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