15th april
2007
Great Wall Motors eyes foothold in Europe
While some of China's larger automakers intend to leap into the European car market
in coming years, Great Wall Motors, China's largest producer of SUVs and pick-up
trucks, is looking to sneak in by the back door, comments Financial Times.
Great Wall has targeted the EU's poorest and newest members as test markets for
their eventual arrival in western Europe. The company plans to sell about 1,000
units of their Hover SUV this year in Romania.
Great Wall's Romanian importer, Alexandrion Group, also has the rights to sell
in Hungary, Bulgaria, Moldova and Macedonia.
"At this point, they really have no idea about the European market,"
says Spiros Iosifidis, head of Alexandrion's Rochin Motors dealership, which sells
the Hover. "So they made the decision to use Romania as a pilot project."
Romania makes sense, Iosifidis said, because the market is more price-sensitive
than western Europe and is growing so quickly.
Romanians bought about 250,000 new passenger vehicles last year, up from 90,000
in 2000. That is expected to climb to 450,000 by 2010. RoChin and Great Wall hope
the Hover can exploit the same conditions that made Logan so successful. Produced
by Dacia, Renault's Romanian subsidiary, using old Renault and Nissan component
designs, the Logan is a cheap but spacious saloon starting at $8,600. It sold
96,000 in Romania last year.
The Hover design is also low on originality, using several Mitsubishi components.
It starts in Romania at 13,000 euros. The four-wheel version with air bags, ABS
and other extras reaches 17,000 euros. That could make the Hover tempting even
for Romanians who earn well above the average net monthly salary of about 270
euros. But some market analysts have doubts.
Dan Vardie, senior editor at Romania's Automedia publishing group, says his countrymen
may be price-sensitive, but are also brand-conscious. "People want to trust
a brand, and Great Wall has no name here." Vardie said Chinese makers can
prosper in Romania but not before they establish a reputation for quality and
service.
"I'm sceptical at the moment that they can catch the market, but in five
or 10 years it will be totally different," he said.
Great Wall, whose largest export markets are in Russia and the Middle East, also
expects to move slowly. Jie Zhu, head of the company's international trade division,
said Great Wall is taking a "cautious attitude" toward the European
market.
When a poor country imports even poorer workers
As Romanians move to better paying jobs in the EU region, companies shift to importing
cheap Chinese labour to man their textile factories.
To get around the chronic labour shortages hampering this traditional textile
centre and in other industries across Romania, Sorin Nicolescu, who runs a clothing
factory, came up with an original solution: import 800 workers from China.
“The explanation is very simple,” said Nicolescu, general manager
of a Swiss concern, the Wear Co. “We don’t have any Romanian workers
because they have all left to work” in Western and Central Europe. Foreign
investors have been attracted to Romania, a poor Balkan country, because of its
low wages and, since January 1, its membership in the European Union. At the same
time, those low wages and freedom of movement through Europe, which is now easier,
have been fueling a wave of emigration that threatens to slow an economic boom
in recent years in Romania.
“This was happening before we joined the EU,” said Ana Murariu, a
production manager at Wear. “Now it’s even worse.”
Romania, a nation of 21.6 million (and declining 0.2% annually), received 9 billion
euros, or about $12 billion, in foreign direct investment last year. That helped
the economy grow last year as much as 7%, with an unemployment rate in January
of 5.4%—well below the European Union average. But with monthly wages averaging
around $375 after taxes, roughly 2 million people, or more than 8% of the population,
have left since the Stalinist government of president Nicolae V Ceausescu fell
in 1989, according to analysts’ estimates. Italy and Spain are the most
popular destinations for Romanian workers, where they usually perform manual labour,
legally and illegally, and generally for lower wages than local people.
Nicolescu said he decided to look for workers in China because he had contracts
there, and those companies had put him in touch with an employment agency. Those
who are hired pay about $2,000 for transportation and the employment agency’s
fee, according to one worker. Once they reach Bacau, a drab industrial city of
181,000 some 150 miles northeast of the capital, Bucharest, they go to work in
a large, inconspicuous warehouse on the outskirts of town.
Inside, about 170 Chinese women operate sewing machines attached to tables stacked
with finished and unfinished garments. Most of the tables, arranged in long rows,
are empty. The plant expects 500 more Chinese workers by the end of May.
The factory is clean, freshly painted and well lighted. The only sound is the
rapid, repetitive thud of the sewing machines as the workers stitch together previously
tailored pieces of garments.
They make mostly sportswear for a range ofbrands including Prada and Carrefour.
All the production is for export.
Nicolescu said he paid the women about $347 a month after taxes. The legal minimum
wage is 132 euros a month ($176) after taxes.
The company operated with Romanian workers until 2003, when operations were suspended
because the work force had dwindled to 200. Nicolescu said the company had posted
hundreds of job offers at a local agency, but they had gone unanswered. “It’s
very difficult work, and it’s not well paid,” Nicolescu acknowledged.
He said the industry found it hard to attract young workers to replace the current
ones, most of whom are nearing retirement. “I’m not very pleased about
working with foreign workers because I have to provide them food and housing on
top of their salaries,” Nicolescu said. That amounts to an additional $130
a month for each employee, he said, in addition to more than $500,000 he spent
building worker dormitories.
Critics say the company would find Romanian workers if it offered better wages.
But Nicolescu replied that higher wages would make his products uncompetitive
internationally, pointing out that textile manufacturers had already left much
of Europe in search of lower costs in regions like China.
Cornelia Barbu, deputy director of the Bacau County employment agency, said inspectors
had inspected conditions for the Chinese workers. “They are treated very
well,” she said. “They have a social club and a kitchen. They live
much better than most of the Romanians living abroad.”
Xiu Xian Hong, from Fujian province, who came here last July, described life as
better than in China. “It is quiet here, and the air is much cleaner,”
she said through a translator who worked at the plant. “The work is the
same— but the pay is more.” But she said she missed her 3-year-old
daughter and her husband back home. Xiu said she had come to Romania because it
was the only place offered when she sought work at an agency in China. She said
she planned to stay at least three years, hoping to save enough money to start
a business, perhaps a shop, when she returned.
Although the city centre is easily accessible by public transportation, the workers
spend most of their free time in five-bed dormitory rooms in the factory complex,
playing cards, reading books and watching Chinese satellite television.
Few local residents have actually seen the workers in town. People in a city park
one recent afternoon said they learned about their new neighbours from newspapers
and television. “Our people have gone to the West and all over the world,
so we need others to replace them,” said Dumitru Padure, a retired aircraft
factory technician.
Andrea Grigoras, a translator, sitting with her daughter, expressed the view that
the Chinese workers received better pay than Romanians and would probably be more
focused than Romanian workers. “I know a lot of Romanians who would do the
work for less,” she said, adding: “I’m not worried. But I’d
get worried if there were many foreign workers coming here.”
A variety of intra-European transportation links here illustrates the scale of
emigration. A discount Romanian-based airline, Blue Air, offers six direct flights
a week from Bacau to Italy—two to Turin and four to Rome. A bus company,
Atlassib, one of many, runs 10 buses daily to Italy from Bacau.
The population of Romania is projected to fall by 29%, below 15.5 million, by
2050, according to the Population Reference Bureau, in Washington. Villages and
towns outside Bucharest, have been hit especially hard. Barbu, of the Bacau employment
agency, suggested that wages would need to reach levels about three-quarters of
those in the West for Romanian workers to return. “We have to get used to
it because the EU means greater mobility,” she said. “Just as we have
left, others will come here.”
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