Business leaders from Indian and Chinese automotive industries meet in Shanghai

China Briefing (Shanghai) - The Automotive Component Manufacturers Association of India held a business-to-business meeting with their Chinese counterparts in the Marriott Hotel in Shanghai on Friday to discuss possible avenues of future cooperation. Over 100 top-level executives from both countries were in attendance, and Director Richard Cant of Dezan Shira & Associates, Asia Briefing’s parent firm, presented key research jointly conducted by AB and DSA on the automotive industry.

For both presenters and attendees of the conference, the topic at hand seemed to be the opportunities available for Indian firms in China, and for Chinese firms in India. Indian companies crave access to what is currently the world’s largest automotive market, and Chinese companies seek cheaper sourcing alternatives as well as market access to the world’s second most populous country.

In a general sense, the simultaneous pressure of rising incomes on vehicle demand and increased productivity on vehicle supply have been the two driving forces in the automobile industry’s rapid expansion in emerging markets. These forces exist—albeit in varying degrees—across Asia, Africa, South and Central America, and investors and manufacturers alike have been attempting to ride the wave. Indeed, this notion was likely experienced on a very visceral level for those who attended the conference today.

Moreover, while the two nations’ auto markets have grown exponentially (China produced only 2 million cars in 1990, now it produces close to 8 million per year), there may yet be room for further expansion.

"In the U.S., the ratio of cars to people is roughly 1 to 2. In Germany, it's 1 to 2. In China, it’s 1 to 50. Given that there are more than a billion people in China, the potential is huge," Richard Cant said during his presentation.

The same is true of India, he later added.

A slew of challenges do lay ahead for automotive firms in China: market saturation, currency appreciation, increasing costs of steel and labor, and of warehouse and factory real estate, and government policies that may encourage the use of clean-tech and battery-powered vehicles. Environmental factors and fuel efficiency issues cannot be ignored either, points with which all in attendance seemed to agree.

Other notable speakers and attendees include Consul General of India in Shanghai Riva Ganguly Das; Vice President of the Shanghai Federation of Industrial Economics Jiang Guang Yu; Secretary General of the Shanghai Automotive Industry Association Yang De Jun; and President of the ACMA Srivats Ram.