Thursday, 29 April 2010

PESTEL Trends – Chinese Car Market – The Danger of Overtly Simplistic Generalisation

As is plainly evident, investment-auto-motives' ethos is that all investment decisions are serious. For share-holders (private & public), industrial futures and society at large.

Given the innate value of finance swirling within still volatile capital markets and its RoI relationship with fragile consumer markets, there has perhaps never been as great a need by investors of all species to critically assess the various options typically available. The investor-base's task is to create positive inter-connectivity within the economic engine - between the multitude of industrial & service sector players so as to best serve the individual within the grande societal context.

Thus today, when reviewing investment possibilities, it is a critical requirement to see beyond the generalised norms that inhabit the human psyche.

Of course the whole of human existence is essentially one of expectational modeling; that is how mankind functions. But as PIMCO has remarked regards the ongoing economic concerns, overt generalisations about situations (ie markets) create stereo-types; which in turn typically creates in actuality an unfounded 'comfortableness'; which can lead to dangerous misapprehension of the situation.

Unfortunately 'expectational modeling' is often at the very heart of investment, perhaps none more so than the car industry given its need to devour capital to raise structural efficiencies. However, the role of the strategic advisor is to look far beyond the 'given norm' of previous experience. Man tends to gravitate toward ingrained perceptions, especially when a situation appears on the surface as a typical re-run of a previous situation, yet the detail of the structure itself may in fact be very different.

Thus, he/she must fully understand the spectrum of variables specific to the case at hand.

investment-auto-motives sees this as a twin diagnostic process, which together seeks to identify and comprehend all pertinent knowledge-bases:

Initially taking the normal (scientific) approach of thesis ('norm') + anti-thesis = synthesis. And latterly, taking an all new view to build a picture from the ground-up so as to intentionally avoid the generalisation trap. This combination of 'real-world' and 'theoretical-world' scenarios, when aligned provides a more detailed, insightful view of an idealised outcome.

Even within supposedly set strictures a planned economy, it is such an approach that should be utilised to answer the question regards the future and growth-power of the component parts of the Chinese auto-sector. Perhaps most critically from both:

1. the international export expansion ambition into the Triad regions.
2. the domestic growth ambition relative to pan-national road infrastructure growth.

Both answers obviously ultimately lie in the hands of the PRC party, the economic machine closely tied to state control, but increasingly - as exemplified by reduced regulation and constraint about Sino-foreign brokerage houses – the demands of the market are becoming an increasing force, against which state-planning must be optimised.

It is a dual-aspect question partially alluded to within a recent edition of The Economist: the article highlighting the rise of younger people's motor-based social clubs, visiting certain places, the popularity of drive-in movie theatres, and the slow adoption of the 'road-house' to service motorists' break needs. Hence this 'toe in the water' of Chinese auto-culture precursed these 2 primary questions posed by a press reporter to an American consultant at the Beijing Auto Show.

His answers - although admittedly obviously constrained given the informal interview format - essentially stated that China would respectively be informed by, and follow, the US experience: both in terms of 'import brand/model ingress' into the US and the spread of an intrinsic auto-orientated culture (and so unit volume demand) throughout China.

When questioned about the timescale in which the Chinese automakers would become a sizable force in the US, the reply was “5-10 years” – the logic being that it took the Japanese 20 years and S.Koreans 10 years. But that stock answer and perception has been on people's lips for at at least the last decade. Of course, the ,ore time passes the greater the likelihood of eventually being proved right, but it is an example of archetypical generalisation that should be avoided.

Being pedantic - as one ultimately must - the truth is that the Japanese with a Post WW-2 US backed industrial plan took only 15 years, even with a 3 year initial false-start, to become a powerful force in US sales, from the release of the 1957 Toyota Toyopet, through to the popularity of the E20 Corolla from 1972 (and similar Nissan/Datsun models). The S.Koreans took between 1983 (with Canadian entry) and 2000 for Hyundai to gain credible North American entry, so 17 years and so 2 years longer than the Japanese.

The organic growth pattern of slow and steady market acceptance of improving quality standards is not a business model the Chinese wish to replicate given their enormous potential for export capacity, hence their purchase and technology adoption of the likes of MG-Rover, Volvo, possibly Hummer, SAAB interest etc. Understandably China wishes to attain world class quality standards as soon as possible to become credible. But as competitor's quality standards move ever onward – especially in the wake of Toyota's problems - and the problems of merging western and Chinese management cultures intensify when seeking both quality and quantity, so the problem of perfect export timing becomes elusive.

As we see from both examples, of critical importance is the transition between what is essentially a state-funded, state-mentality driven enterprise into a privately run corporation with developed internal capability across the board and critically, knowledge of foreign market demands. Unsurprisingly the normal route has been that of low-cost/price offering to differentiation to ultimately niche supply – the ideal being a span of all, each strategy directed at different regions positioned at various points of the regional economic growth curve. Hence for Toyota: Toyota, Lexus, Scion and now a return to roots for low-cost capability relative to India et al.

The point is that China has already undergone a 30 year systematic auto-sector development model, from the earliest days of Beijing Jeep with Chrysler Corp, to the productionisation growth years with VW & GM to the more recent mixed marriage JVs of its domestic players with the remainder of existing foreign multi-nationals. And by way of nefarious but useful self-learning for production cost-quality balances were the copy-cat efforts such as mimicked Smart ForTwo, FIAT Panda, Mercedes CLK or Renault Megane CC.

As to the real time-frame for major market foreign export, much depends upon other variables such as satiating local demand and the higher level concerns of Renminbi FX rates, what with calls for a floating currency. Hence there is no normal model to follow, and unlike the previous Japanese and S.Korean examples, the US has far less political leverage regards national export policy formation, though interestingly perhaps the likes of Warren Buffet with BYD interests could be inadvertently playing that very role.

Pundits will as ever regurgitate conventional thinking, but the devil will be in the detail, and as with all things Sino-American or Sino-European, there is a mountain of detail to sift, understand and prioritise so as to obtain an informed opinion.

Moving on to the second question...

When the consultant was questioned about the relativity of China's expanding inter-city/inter-province road network and a resultant growth in private vehicle sales the answer was a definite “yes”...”re-running the 1950s American model” (or words to that effect).

The fundamental premis for ongoing high-rate private vehicle TIV growth of 10-14% CAGR is undeniable. Increasing wealth, generated by the convergence of: increasing urbanisation, better education, aligned human capital, highly liquid captive capital markets with increasing FDI and ongoing agricultural efficiency reform, when all combined create a positive economic spiral to improved living standards and induce wealth generation.

Thus the inter-connect between transport networks, human movement, urbanization and is historically well recognised; and was well conveyed.

However, relative to recent vehicle sales spikes, the consultant disagreed with the assertion that recent tax incentives played a role in rapidly re-energising vehicle sales. Of course they did.

The Chinese are value-conscious, deal savvy “jump-in/jump-out” consumers, and when the opportunity came to enjoy a new car at lower cost it was seized with open arms; as it was in Europe and the US by certain buyer-set mentalities.

The recent vigorous market dynamics that drove a +74% quarter-based YoY surge came after a period of economic cooling and concerns that the national economy might over-contract; as seen by the hoards of rural returning labour from cities. This momentary blip in the urbanisation model could have turned into a longer-term trend had such incentives – along with the massive stimulus package – not been enacted.

NB investment-auto-motives believes that the level of stimulus spend in China had greater reasoning and necessity than the over-extended 'prime-pumping' seen in the US & Europe due to necessary orderly 'expansionism' versus 'orderly 'contractionism'].

As such, the small car purchase tax breaks were part and parcel of a fundamental trend to increase car sales via the dispersal of wealth into the pockets of the expanding middle class. Indeed much of the incentive was taken up by first time buyers looking for their initial affordable car, an offering largely made by indigenous manufacturers, the PRC administration recognising that the spent cash would be retained and effectively re-cycled within the country.

There was also an observation from the Auto Show that domestic manufacturers were walking up the pricing ladder by offering larger, more luxurious vehicles, whilst the typically more premium foreign manufacturers had started to offer affordable small cars.

This again is a dangerous generalisation, since the dynamics of still vibrant maturing auto-markets are very different from the archetype western model. Given their comparative lesser 'consumer brand equity' the indigenous manufacturers will have to still play the lowest cost (in small cars) or greater value (in larger cars) game. This innate quality disparity between Chinese and Japanese/European/American offerings means that cars of similar sizes effectively sit within different pricing sub-segments; much as BMW's Mini Cooper does not compete with say Hyundai's i10 in the west, and indeed in China.

As per larger cars, yes the Chinese are understandably seeking to walk up the quality ladder, but for some time to come their new larger cars will have to compete on foot-print size and specification at a cost. For the Chinese buyer it will mean making a same price choice between a say medium-sized foreign badged car with associated kudos, or a larger, better appointed (but probably lower build quality) indigenous car.

Thus an innate customer perceived quality heir achy exists, and that is something that foreign firm executives will endeavour to maintain; allowing them to maintain a pricing and profitability position, whilst awaiting the Chinese public to 'come to them' as their annual incomes rise. and expectations increase. When evaluating the potential of 2nd and 3rd tier cities, the intention is not to chase the hoards of price-conscious buyers there but to place themselves ahead of time and create a local demand buzz.

Thus the idea that a key challenge is managing the “hyper-competition” between indigenous and foreign firms was an over-statement, probably touted by foreign factory managers and dealer managers on the Beijing Show floor; they rightly see the short-term power of pricing in the deal conscious market, yet are under-pressure to grow capacity/sales whilst maintaining the foreign-local credibility gap.

Thus any idea that Chinese firms are an immediate threat to more premium foreign manufacturers, or indeed that those foreign firms are chasing entry level consumers is a typical 'attention grabbing' misnomer.

As with Japan's Lexus and Korea's Genesis brands, the time will eventually come to pass that sees a company like Geely or SAIC eventually compete with the best, but that process is still in its infancy given the political (esp IPR related), technical and management core-competence chasms between China and the Triad nations – even with long-established JVs and more recent buy-outs of flailing western firms.

Having seen MG-Rover swallowed by Nanjing Auto & SAIC, only for the former to be swallowed by the latter as part of the national sector consolidation policy, today's eyes are obviously on Geely's purchase of Volvo. The commentator once again espoused the fact that it would be a challenge given the past failures of M&A marriages such as Daimler-Chrysler, with different governance systems creating friction, and an entrepreneurial vs conservative attitude creating conflict. But there have equally been successful marriages such as Renault-Nissan, and ever more alliances.

But as mentioned, key will be the ability to reduce Volvo's innate cost-structure via Chinese supply sources (at sheet metal, component levels and sub-assembly levels), localised production giving Volvo access to the Chinese consumer, whilst driving down BoM (Bill of Material) costs for Swedish assembled cars, thus ideally leveraging cost-reduction with distinct Euro identity.

[NB it must be noted that investment-auto-motives suspects that to the Chinese consumer, this Swedish marque has far less relevance than German, Japanese, British or Italian car marques. Thus Geely's prime ambition was to obtain Volvo's technology base to upgrade their own locally branded cars, export vehicles and, only as a distant second mode, re-energise Volvo in western markets.

The MG-Rover case study highlights the ever-ongoing latent promise of 're-birthing' MG in the UK and Europe – no doubt much depending upon heavy government subsidy – something the Swedish government was keen to avoid, but will ultimately face once again from Volvo's new owners].

From the question of the Chinese Industry itself, we move onto the question of infrastructure imbued auto-sector growth.

When asked whether the expansion of road infrastructure would have a bearing on new car sales the obvious reply is that it undoubtedly will. Of course there is a synergy, but to what degree, and is it not indeed national specific relative to other macro-trend variables which have a bearing on private car usage?

The historical perspective offers the background to today's overtly generalised perceptions.

Perhaps the first country to create a networked highway system was Germany, under the auspices of “for the people” but also reciprocal to military use. However, the very sight of autobahns being built scurried the 'deutsche volk' to buy into the 'Volks Wagen' (People's Car) ideology via a coupon based system. With a proficient but route and capacity lacking railway system alternative – due to former separate sovereign states - this 1930s initiative then set the highway precedent of ”build it and they will come!”. History shows that those incoming funds were diverted to military use, yet the synergistic relationship between the 'Auto und Bahn' system when offered to a people seeking mobility freedom was undeniably powerful.

The second, and most prolific, case study of course comes from the US.

Cross-country road-building had started in earnest in the 1920s, serving primarily road haulage and also the Model T's successors, and continued apace in the 1930s, at a slower pace throughout WW2, and regained in the late 1940s & 50s. Thus the map had been laid over 30 years, roadways periodically enhanced to cater for modern traffic. Remember too that WW2 had been an economic boom for the USA, so 1945 onward, full employment was recycled into greater wealth generation, the 1950s/60s became the heyday of the family station wagon and cross-country jaunts, aswell as 'escape routes' for mobile youngsters: Route 66 and all that. Critically though, the US rail system was, under privatisation, re-orientated to bias more profitable and stable freight income. Seeing the potential of the auto-industry as a wealth generator, and vital element of expanding suburbia, the US government's transport focus had long moved away from rail toward the car. And from the 1980s onwards, affordable domestic flights became ever more popular, given the time saving offered in a 'cash-rich/time poor' nation, so seeing the demise of the legendary road-trip.

Given its past, overtly socialist political agenda and the sheer scale of population challenge, whilst previous highway network development models can be overlaid, China's background (politically and critically socially), its task and apparent solution is very different.

The highway network is being developed (as is the norm) to serve commercial and economic growth, both linking major cities and pushing ever further into the hinterland to promote the transportation of people eastwards, foodstuffs eastwards and agricultural & industrial machinery and services westwards. As stated a prime raison d'etre is the populational re-distribution of rural workers both towards regional towns and to the major coastal cities. Thus, the highway development programme, urbanization programme and provincial & agricultural development programmes run with intrinsic inter-connectedness.

But the dynamics of private car owner's use of these highways may ultimately be very different to that seen in the US in the 1950s and 60s, even if some elements like China's popular drive-in movies screens depict a simplistic similarity. Remember, drive ins were typically sighted at the edge of medium sized rural towns, not cities or villages in the US. So visitors were simply town and district-bound kids and families. Drive-Ins were a local solution to cheap entertainment, not an integral element to a cross-nation infrastructure.

Such simple reference-points generate the idea of intercity and holiday car travel will shift to mimic 1950/60s America. But will it play out as expected, with as McKinsey & Co have been reported to state that China will see a tenfold increase in car demand between 2005-2030?

[NB In 2005 China manufactured 5.71m units, though it would be naive to think this figure can be multiplied by 10 given the growth and natural absorption of the used car market].

China is unlike the yesteryear US since it combines very attractive substitutions to car travel by way of an expanding, modern rail system and rapidly commercialised airport & airline network; something not available to Americans or indeed their Asiatic Australian cousins in days gone by as they had little choice but to take the car for long distance, inter-state journeys.

The following illustrates the major distances between 1st tier cities and so question travel options?

Beijing - Shanghai 908 miles or 1,461 kms
Beijing - Shenzhen 1196 miles or 1925 kms
Beijing - Nanjing 718 miles or 1,139 kms
Shanghai - Shenzhen 740 miles or 1191 kms

Thus initial highway developments look to continue inter-linking neighbouring regional cities, not the creation of a veritable spiders-web of nation-crossing super-highways. Good recent examples are the Beijing - Tianjin superhighway (86 miles in length), and the 4 lane toll-road between Hangzou and the port of Ningbo in Zheijing province.

Moreover, unlike the big-car culture that nurtured the US and Australian car user, China uses typically Euro sized and smaller cars, far from the US mom & pop, lazy cruise, 6-cyl or V8 station wagon, and with a typically Chinese 'go go...busy busy' attitude, drive them in a manner more reminiscent of manically active Europeans, a far cry from the lazy methods of the US. This is seemingly true even of younger female drivers who though often preferring an automatic gearbox option, still drive aggressively as required. Though automatics have become the norm for many chauffeur driven cars and taxi drivers, imbuing a sense of less urgency, even many older men brought-up on manual drive cars, see them as reflecting a machismo image.

If this looks at the everyday, commuter behavior, which differs heavily to the US, so there may be major differences regarding the use of cars on holiday trips. The yesteryear US holiday maker was stuck on an isolated continent which with prohibitive air-travel costs denied travel to anywhere but within the US or Canada and later the Caribbean and Mexico. Whereas, Chinese holiday maker are more likely to mimic Japanese tourist trend in the 1980s/90s, looking elsewhere around SE Asia and Australasia to see new, more exotic sights. The trend has already begun via partially subsidised Chinese airlines.

And once again innate national mentality is critical; whilst the Chinese will undergo almost 24/7 exertion for commerce/money he/she is far more passive regards the use of leisure-time, in need of the relaxation, less willing to consistently drive hundreds of miles once the original novelty has worn off.

Moreover the car is a conspicuous consumption status symbol, so driven locally where it can be seen and recognised as belonging to Mr X or Miss Y or Family Z

Another US vs China difference regards cross-country leisure travel is that by the time the car was mainstream in the US the country had developed over the prevailing 150 years - and so 'time-space' illustratively - both from East coast westwards and from West Coast eastwards so meeting in the middle. The US had substantial region-based cultural variation to act as attractions, from the up-market sailing locale of Maine, to the Catskill Mountains, to the historic centres of Boston, Pennsylvania etc, Atlantic City aswell as newer build attractions like Disneyland & KnotsBerry Farm, in car-centric California and Miami beach and DisneyWorld in Florida, etc etc.

China appears – to an outsider - culturally more homogenous given its effectively stagnant economic development under communist rule, and though ethnically diverse and with the dynastic past of Tang, Song & Ming influence, seems not to have the obvious regional 'time-space' illustrations of say the US or Europe which in turn generated motor tourism.

China of course has legendary sites such as the Great Wall and Beijing's Forbidden City (Palace Museum) and Tienanmen, the Temple of Heaven, the Summer Palace, Terracotta Army and in the provinces places like Suzhou (China's Venice). However, these are typically reached by tour-bus, municiple bus or rail, with limited visitor parking given their proximity to the city centre and relative land value; thus largely excluding parking for anyone but PRC officials. Even so provision will need to be made for the motorist, and so 'Park & Ride' schemes will be very necessary to both cater for the increasing amount of vehicles heading to attractions and to ecologically protect the buildings, remnants and relics.

Though roadside cafes/restaurants etc are being built, there is reportedly a lack of general amenities given lack of private investor interest reletive to typically low or even negative RoI, and the very vastness of the country. But, beyond driver/passenger needs, perhaps most important of all is the lack of a suitable vehicle-reletive infrastructure. Little or no breakdown services often just beyond city-limits, let alone in far-away stretches. Any available mechanic more adept with 1950s/60s based trucks from FAW, Nanjing, SAIC and BAIC and older Russian sourced trucks than any modern passenger car, which is less amenable to DIY tinkering and on-the-spot fabrication.

[NB the '4S shop' – consisting of Sales / Sparepart / Service / Survey - is the main interface for car-related issues, these ostensibly dealer-service sites largely located in Tier 1 and 2 cities].

So it may be the case that China more closely resembles the pattern set out in 1970s UK when people increasingly afforded both cars and foreign travel by plane, for the Chinese using Air China, China Southern and China Eastern and newer budget carriers. (Since late 2009 it has been possible to travel to Taiwan from 21 cities on the Chinese mainland, with flights typically over-booked thus demonstrating the level of air-travel demand. The same story in India).

The truth is that beyond the natural beauty that satisfies a small portion of travelers, for the typical tourist there is little attraction in China's interior which is worth the lengthy drive, when the glamour of urbanization and historic and modern leisure is typically coastal based?

Rail continues to serve the modern transport requirement, with major infrastructure projects seeing renewal in Beijing (now with 3 major rail hubs) and similarly designed new stations across coastal cities and the nation. Given the eco-credentials of rail on a per passenger carbon footprint basis, and the associatively large commercial activity it brings, it seems that rail is set as the preferred 21st century cross country transport solution. The present lengthy travel times shortened with much improved track, signalling and telematics systems, consequent improved service schedules and the ongoing introduction of rapid 'Bullet' trains.

A prime travel motive for any workforce - Chinese or American - is to see distant family – the Thanksgiving holidays being the archetype example. This will be a similar, innately human catalyst for China's new motorists, expecting to travel far on holidays. But as mentioned the options for the modern mobile Chinese citizen seem broader, alternatives undermining reliance on the car.

This highlights the major difference between the China's transportational development approach and that of the US to date.

China's is a 'simultaneous' transport development philosophy exploiting multiple public and private vehicle types, in direct constrast to the US's historic experience of 'chronologically successive' transport solutions, largely dependent on national economic stage and technical prowess.

This then is perhaps the most visible difference between each's economic ideologies: the power of enormous yet partially wasteful socialist national planning, versus a system of capital efficiencies with probable social inadequacies.

Each nation's roads then lay out the mentality map of their respective ideologies, even if, as we witness today, the US moves ideologically 'left', and China moves ideologically 'right'.

Hence, in the late 1950s onwards where rail (and public transport in General) was comparatively under-capitalized as a consequence of promoting the automobile, the US Auto industry and ultimately the US enterprise-based economic model. Thus US road-building ran as a parallel to the car-building, both pro-actively encouraged, (The historic political allegiances to GM are well documented)

China, although increasingly enterprise driven, seems not to share this industrially biased development model. Instead developing its transport solutions in parallel. Part of the raison d'etre to focus on public transport (inc underground metro systems) beyond the mass transit efficiency of its citizens is inevitably to enable inward bound foreign tourism. And so continue to buoy Yen, Euro and Dollar foreign currency reserves.

[NB investment-auto-motives believes that China will maintain a deflated Renminbi FX policy, even if 'encouraging signs' are being transmitted through capital markets' commentators as a pressure-repreaving answer to US criticism].

Foreign eyes however should not be overawed by China's outward-facing progressive facade, the present World Expo the big symbol: the electric vehicle story a good case in point.

Given China's aligned and ever improving capabilities to build ICE powered vehicles - with critically ICE's complex, multi-part value-chain which helps drive the economy – the conventional car, not the electric car, represents by far the real-world picture of Chinese car availability and demand.

Though the Beijing Auto Show presents a plethora of EVs from BYD, Geely, Chery, Lifan, FAW, Changan and BAIC, these are for the most-part PR vehicles to demonstrate each company's supposed progressive ethos and capabilities. (Yang Jian, editor of Automotive News China provides similar comment).

Moreover, the very notion of a new wave of travel-constrained EVs set within a massive super-highway network is pragmatically untenable - the technology and the system at odds given today's still prevalent long-distance usability barriers. Thus high-way build programmes must be suited to oil-fueled vehicles - as is the case today and historic norm – given oil's role as an economic pillar.

Given China's own petroleum production capability with companies such as PetroChina, Sinopec, CNOOC and mass of smaller companies, its drilling interests in Iraq, its trade links with state-based foreign oil companies, the car-demand linked synergistic growth in downstream petrol/diesel retail potential, and Beijing/Shanghai financial districts' links to crude-oil trading and oil company share-trading; it is plainly oil that will drive China in all senses, not the showcased EVs that represent an eco-illusion in the global CO2 challenge.

[NB investment-auto-motives believes Hybrids will continue to provide the real-world broad-use solution, whilst radical alteration is needed in product type and business modelling for what would be only local use – endemically lower utility-value and so lower pricing-value EVs].

As such it will be perfecting 'the (ICE) car' as is, and its 'role' to suit both future users' demands at home and abroad within the infrastructure context, that will occupy the minds of indigenous company executives and largely province-based highway planners.

Any ideas of an massively intricate 'spider-web' super-highway that 'criss-crosses' the whole nation in a USA v2.0 model seems presently illogical.

Instead, the continuance of major cities spawning satellite towns/cities linked by relatively short distance 8-lane 'super-highways' to transport the mass of commuters and freight. Done so in a far more technology-controlled manner than the coast to coast 'open-roads' of 1950s America. The world has moved on rapidly since those days, and modern China, exploiting all it can to maintain its GDP growth and world influence, needs to maximise functional and commercial output from its metropolitan and provincial infrastructure planning.

That is not to say that the state investment model of today will not eventually morph into a privately funded, capital-driven nation of tomorrow. Society's liberalisation and capital's free-marketeering will enable that transition. By which time of course the results of today's massive infrastructure programmes – including the highway system – will need refurbishment.

At such a time, the relative traffic-flow capacities of all routes and their respective economic contribution measures will be fed into the RoI forecasting models of wholly privately owned civil engineering companies, construction companies and utilities companies. Hence, the publicly funded infrastructure build of today helps to hone the eventual full privatisation model of tomorrow.

Yet to realise that outcome means viewing the car's relativity to grand-infrastructure picture at as detailed a level as possible.

Ultimately China hopes to maintain its position as a global economic engine through both increased domestic consumption and foreign export of increasingly higher-value goods – as mentioned, the Chinese electric car plays its role a the symbol in that ambition.

To do so however requires detailed thinking by a cross-section of experts as to how far China mimics the vehicle and infrastructure growth stories of the past. China must build appropriate cars for both export and domestic use, or possibly turning that argument on its head, create its own culture and auto-format which it then uses to influence the US, Europe, Asia, Latin America and even possibly a rapidly evolving Africa.

As such, it will need to critically assess Japan's and S.Korea's past to view their respective balancing of domestic vs export vehicle use. Japan had to recognise a level of 'Americanisation' and 'Europeanisation' which influenced the very fabric of its road-network and the DNA of its cars. For the S.Koreans it was a question of adding 'Japanisation' learning too. Thus China has much history to draw from in constructing its future.

China, has already effectively become the 21st century global hub of car-making, and as such will need to absorb best practice and identify and rebuff poor outcomes. It must continue do so quickly to align proficiency with growth ambitions. Moreover, it will need to defend the best of its own culture to create an innate national auto-culture, one in which the very infrastructure promotes the sociological which in turn feeds the developmental DNA of the car.

To achieve all of this, as part of the step by step move-away from a command-economy, requires far more than well intentioned yet short-sighted generalisations.