The major car-exporting countries to China are Germany, Japan, South Korea, the U.S, the U.K. while China’s car exports go to countries such as Egypt, the U.S, Russia, Uruguay, Italy, Iran, Germany, Chile and Bangladesh. Car companies with top ten sales from the period of January to April 2010 are Shanghai General Monitor, Shanghai Volkswagen, FAW Volkswagen, Build Your Dream, Beijing Hyundai, Dongfeng Nissan, Chery, Geely, FAW TOYOTA and Ford China.
Apart from the attempt to expand the domestic market, Chinese auto brands have also started to target the overseas market. On August 2nd,2010, Geely has completed its purchase of Ford Motor Co’s (F.N) Volvo unit; this is the largest acquisition of a foreign automotive company by the Chinese company. Its previous overseas development includes the acquisition of the Australian gearbox maker Drivetrain Systems International and the tie-up with the British cab maker Manganese Bronze Holdings Plc (MNGS.L).
One of the reasons for the expansion of the Chinese car industry in the wake of the global economic crisis is the Chinese government’s active interventions in the car market, as an effort to stimulate production and domestic consumption. First, starting from the end of 2008, the central government has reduced the tax on fuel, abolished the road fees (yanglufei), and cut the sales tax on cars with engine displacement of less than 1.6 liters by 50% (BBC, 5th April 2009). Second, from March 1st to December 31st, 2009, the Chinese government has put in 5,000 million yuan as subsidies to peasants purchasing light trucks (qingxingzaihuoche) or mini buses (weixingkeche) with engine capacity of less than 1.3 liters in exchange for their old three wheeled vehicles (sanlunchiche)or low-speed trucks (disuhuoche) (BBC 15th January 2009).
Apart from its support of the traditional car industry, the Chinese government has been spending huge efforts on promoting the new energy vehicles. Early in 2010, it has announced a pilot scheme of subsidizing the purchase of new energy vehicles by individuals in five cities at a maximum of 60,000 yuan per individual (HKTDC, 5th July 2010). Also, it has initiated a demonstration program of having 1000 new energy vehicles operated in ten cities in 2010 and the target will be increased to 10,000 units in three years. Moreover, it plans to produce 500,000 new energy vehicles in the coming three years (HKTDC, 5th July 2010) and it is anticipated that by 2020, half of the cars in China will be new energy vehicles, that is about 65 million yuan (Sina.com.cn, 22nd March 2010). Furthermore, the Chinese government has announced a new policy of subsidizing consumers’ purchases of energy saving vehicles with 3000 yuan (Economic Daily, 22nd June 2010)
The expansion of the car industry, including the traditional, new energy and energy saving vehicles are deemed to be of strategic economic significance to China. On the one hand, it helps boost the domestic consumption while the export industries are hit hard by the global economic crisis as the foreign demand has plummeted. On the other, increasing car production also means a concomitant increase of steel production and consumption. It is reported that a 1 percent increase in car production will contribute to 0.23 percent of steel consumption (BBC 15th January 2010).
The impacts of the expansion of the car industry on Chinese workers
The rapid expansion of the car industry in China has at least two profound implications. First, both local and foreign investment in the automotive industries will continue to increase as the domestic consumption market is huge in China. For example, on the August 30th, 2009, General Motors from the U.S. and the China FAW Group have jointly established the FAW-GM Light Duty Commercial Vehicle Company Limited in China, involving investments of 2000 million yuan (BBC 30th August 2009).
Second, the working conditions of workers from the car industry are facing serious challenges as competition is getting keen among different car companies. According to news reports, the average hourly pay for workers in the car industry is about 13.58 yuan; however, it is estimated that most manual workers in fact get less than this amount as this figure also includes the white collar workers who usually enjoy high salaries (Auto.qq.com, April 19th, 2010). What is worth our attention is, despite the swift expansion of the Chinese car industry in the wake of the global economic crisis, the basic salaries of most auto workers have not been adjusted. They earn more only because of increasing overtime (Auto.qq.com, April 19th, 2010).
Stagnant wages with increasing work intensity explain why there has been a wave of strikes in the car industry in the first half of 2010. The strike staged by workers in the Honda Auto Parts Manufacturing Co., Ltd. (CHAM) in Foshan is a notable example that has attracted nation-wide as well as international attention. This strike was started on May 17th. 2010; it involved over 1800 workers and lasted for 17 days. It caused disruption of production not only in that particular factory but also in three other Honda factories in other parts of China and created a daily loss of 240 million Yuan for the enterprise. Honda workers demanded a wage increase and a democratic reform of trade unions as the existing trade unions could barely represent their interests. At first the company was reluctant to have any negotiations with workers but it later had to bow to pressure and entered into negotiations with 30 workers representatives who were directly elected by workers. In the end, both parties reached an agreement of raising workers’ wages to 2044 Yuan with a 32.4 percent increase and intern students’ wages to around 1500 Yuan with an increase of 70 percent.
CHAM workers strike is just a tip of the iceberg. Almost at the same time of this strike, it was reported that workers from a supplier to Hyundai in Beijing also launched a strike to demand higher wages. And shortly after the Honda strikes in Foshan, workers from another Honda factory in Zhongshan staged a strike requesting higher wages and a reform of the company trade union. Adding to this, workers from two Toyota factories in Tianjin, Atsumitec Co (a supplier to Honda) and Ormon (a supplier to Honda, Ford and BWM), have followed the example of their counterparts and were on strike in June and July. Table 2 shows the detail of all auto workers strike from May to July 2010 in China.