SHANGHAI -- Looking back on the landscape of China's auto industry over the past two years, I can't help but feel amazed by the quick inroads that private Chinese automakers have made.
These companies didn't even exist until the late 1990s. In 2003, BYD Co. built its first cars. Just six years later, it sold more passenger vehicles than any other Chinese automaker.
In 2002, Great Wall Motor Co. built its first vehicle. Seven years later, it has certified two sedans, an SUV and a pickup for the European market.
This year, the 13-year-old Zhejiang Geely Holding Group Co. acquired Volvo Car Corp. And in August, an obscure SUV manufacturer called Huatai Automobile Co. launched its first sedan.
After nearly tripling sales in 2009, Huatai's sales in the first seven months of 2010 surged 80 percent to 44,843 units. Does a small company like Huatai have a chance to gain a foothold in China's market for domestic sedans? I think it does.
China's talent pool of auto executives is rapidly growing. This year, Huatai hired four executives away from Shenyang Brilliance Jinbei Automobile Co., a state-owned automaker.
By contrast, state-owned automakers are making halting progress gaining market share and building their own brands.
Protected by the government and saddled with rigid management, state-owned automakers are not fully exposed to market competition. As a result, they are inefficient and pursue misguided strategies.
Chery Automobile Co. exemplifies the problem. Backed by loans from state-owned banks, it has built too much production capacity and paid too little attention to its brand image. It is rapidly losing market share and has difficulty marketing new models.
Shanghai Automotive Industry Corp. has made good progress building its Roewe car brand. But the company still faces daunting challenges reviving Nanjing Automobile Group Corp., the automaker it acquired in 2008 at the government's request.
Other state-owned automakers, such as Beijing Automotive Industry Holding Corp. and Guangzhou Automobile Group Corp., have yet to introduce their own brands.
To be sure, the private Chinese automakers do not yet pose a serious threat to established international automakers such as Volkswagen, Toyota and General Motors.
But with efficient practices, effective cost controls and an expanding management talent pool, private Chinese automakers are poised to gain a greater share of the market.