Highlights from the last week of China business news.

Wild ride for markets continues
Keep those seat belts fastened. Stocks in Shanghai and Shenzhen posted their fourth straight day of gains on Tuesday, led by brokerages such as Haitong Securities and Guoyuan Securities, and with a little help thrown in from rice companies who were boosted by gains in rice futures on the Chicago Board of Trade. But the very next day the benchmark Shanghai Stock Exchange fell 5.5%, with the Shanghai Composite Index posting its largest single-day drop in over two months to end at 3,413.907 points. Meanwhile consumers and entrepreneurs were at odds. The National Bureau of Statistics (NBS) said that its entrepreneur confidence index in the first quarter rose one point over the previous quarter to 140.6. Consumers, however, weren’t feeling as chipper. The NBS consumer confidence index dropped by 1.7 points in the first quarter to 94.8 points at the end of March, which represented a slight increase from an 18-month low of 94.3 recorded in February.

Car nuts, nutty pilots
Someone in China wants to sell you a car. Auto sales in China were up 21% in the first quarter from the same period last year to reach about 2.58 million. Both Ford and Volkswagen posted record sales in the period, and China’s booming auto market is doing its part to offset slowing sales in the US. But one company doesn’t have as much to cheer about. South Korea’s Hyundai, in response to slowing China sales in 2007, is revamping its Elantra line of sedans with an upscale model made exclusively for the China market. And for the time being, it might be better to drive than fly, given what’s been happening with China Eastern Airlines. The carrier suspended pilots for intentionally disrupting 21 flights late last month to express grievances over labor policies. Pilots either turned their flights around mid-way, or landed and took off again without allowing passengers to disembark. No one could confirm whether the 1,000 inconvenienced passengers were given an extra bag of peanuts for their troubles.

You can also get the weekly news by e-mail. Just subscribe here.

Highlights from the last week of China business news: Paulson’s latest visit (no prizes for guessing what he talked about. Starts with an R and ends with a ‘enminbi’); state-owned steel and auto giants get leaner, but not without dieting problems.

(more…)

ACNielsen has just released a new report analyzing consumer attitudes toward buying a car in China.

Among other things, the report dissected the information sources Chinese consumers rely on when purchasing vehicles. Previous ACNielsen studies had shown the internet is a powerful communication tool for auto marketers, with up to 74% of the online population obtaining car news via the internet.

This report builds the picture further: around 45% of potential buyers consider automotive magazines a good source of information, 34% rate recommendations from existing owners, 26% listen to advertising and 22% think attending an auto show is a good way to pick up purchasing tips.

What surprised me, but probably should not have, is that only 16% considered dealers a good source of information (The media release did not provide a comparative figure for the role of dealerships in the car-selling process in other markets, saying only that they played a “major role”).

We are all familiar with the pigeonholing of car salesmen on the lower rungs of polite society, alongside lawyers, politicians and journalists, but taken with a grain of salt the advice of a car salesman, or any other salesman for that matter, is an important part of my purchasing decisions. I am sure that more than 16% of Westerners would agree, at least in their home markets.

According to Philippe Coquelle, Director of Automotive Research, ACNielsen China, dealerships have an opportunity to play a bigger role in bridging the relationship between the car brand and its buyers.

I agree entirely, but I wonder whether consumers are prepared to listen? Is the low ranking of dealerships in China because the dealers are not trying hard enough, or simply a case of the “Xiangyang market factor” at work, whereby the fear of being sold a lemon builds in direct relation to the salesperson’s efforts.

So, China has started exporting jobs to the US.

Nanjing Automobiles, China’s oldest carmaker, is setting up a plant, global headquarters and R&D facility in Oklahoma USA, to revive one of Britain’s most revered brands, the MG.

In a mirror image of the export processing zones that first brought US factories to China in the 1980s, Nanjing’s relocation comes complete with generous state incentives, expected to include quarterly cash payments of up to 5% of the company’s payroll for 10 years under the state’s Quality Jobs Act.

Ok, it’s not quite a mirror image. According to media reports, the project will employ 510 people on an annual payroll in excess of US$30 million. At an average salary of almost US$60,000, Nanjing is certainly not hunting for cheap labor, which makes you wonder what they are doing.

If it’s about access, the company is barking up the wrong tree. With low barriers to auto-imports in the US, Nanjing would be better placed spending its money on Austrian engine makers, Italian designers and US distributors than a US production line. The consumers aren’t going to care that the cars are made in Yokesville, USA. Despite the rhetoric, American patriotism is long since gone when it comes to their cars.

There may not be much in it for Nanjing, but for Hu Jintao and his lot, the move is a PR coup. When George Dubya next rabbits on about losing jobs to China, Hu can strike back from a position of power. Not only is China now sending jobs back, it’s sending back better jobs, and bigger salaries.

But if the US gets its wish on RMB appreciation, as the “Made in America” label starts appearing on more and more Chinese products, Chinese workers may one day be complaining about losing cheap manufacturing jobs to the rising threat out East across the Pacific.