Ford finds millions of new customers in China

CBS News (Shanghai) - As CBS News reported earlier Thursday, the United States filed a complaint against China with the World Trade Organization. The U.S. accuses China of putting unfair fees on cars from America, making it more expensive for Chinese drivers.

And the Chinese really love their cars. In fact, automobiles are a thriving industry in the country, and Ford is taking advantage of it.

At the Ford dealership in Shanghai, most of the customers know exactly what they're looking for.

One couple said they chose a Ford because they have a 1-year-old baby.

"This car is very safe," said a woman.

It wasn't long ago that bicycles ruled the roads in China. In 1985, a mere 5,000 passenger cars were sold here. Since then China has fallen head over heels in love with the car.

Last year the Chinese bought 18 million cars -- 6 million more than were sold in the U.S. -- and 80 percent pay cash. For the growing Chinese middle class, it's a status symbol.

"It's the largest market in the world," said Joe Hinrichs, Ford's top executive in Asia.

Ford predicts that by the year 2020, Chinese drivers will buy a staggering 30 million cars a year. As a car company, Hinrichs said Ford has to be a part of it.

"Last year nearly 29 percent of the sales worldwide were sold in China," Hinrichs said. "If you're going to be a global auto player like Ford you have to have a presence in China."

Joe Hinrichs, a top executive at Ford in China, explains how the American carmaker is thriving in the Asian country (Credit: CBS News)

Ford is planning to double production in China with five new plants. And while it won't provide jobs for U.S. autoworkers, its the largest expansion for the carmaker since the 1950s in Detroit.

The freeways in Beijing are already packed. A typical rush hour in Beijing looks like a bad day in New York, Los Angeles or Chicago. Which raises the question: If the roads are already jam-packed in the major cities, where is the market for all those new cars?

"Go west," says Hinrichs, to China's vast interior, where there are hundreds of millions of potential car buyers. Most have never owned a car before.

"For many Chinese who have been riding the subway, riding a bike, scooter, riding a bus for your whole life," Hinrichs said, "the experience people have for the first time having the freedom of transportation to go where they want to go is very special."

And with all that cash changing hands, Ford is staking out new territory -- in a country where an American car brings instant prestige.