SHANGHAI -- I was walking towards the venue for an international supplier show in Shanghai a few weeks ago. A Chinese woman came up and asked me a question in Russian! She wanted to know the way to the show.
Walking around the show, I realized why she might have thought I spoke Russian. The show was full of Russian men shopping for parts in China.
We tend to see China as a source of inexpensive parts for American and Western European automotive manufacturers and suppliers. But Chinese suppliers and foreign suppliers producing in China should also be looking to other fast-growing emerging markets for business.
The Russian vehicle market will grow 30.3 percent in 2007 compared to the previous year to 2.5 million units, according to J.D. Power and Associates.
True, China's light-vehicle market is about twice as big as Russia's. But China's growth rate will be slightly smaller, around 25 percent.
The Russian market is a good target for Chinese suppliers. The standards there are still lower than in the United States and Europe. Suppliers would not have to make as many quality improvements to sell to Russia.
That's not a positive, of course. Chinese suppliers should be aiming to improve their quality. But strictly from the standpoint of sales, Russia looks good.
Russia is already an important export market for Chinese brand auto manufacturers. Chery Automobile Co. is the biggest exporter to Russia. It sold 12,000 units to Russia in 2006; that will grow to 40,000 in 2007.
Chery has received a license to manufacture cars there. Other Chinese manufacturers want to do the same, but will have to wait. In August, the Russian government issued a ban on new plant licenses for foreign automakers.
But the ban doesn't prevent suppliers making low-cost parts in China from finding new customers in Russia.