Chinese Consumers Benefit From Competition
China last year overtook the United States to become the world's largest recipient of foreign direct investment, according to new figures released by the Organisation for Economic Co-operation and Development in July. And the $53 billion it received in 2003 is likely to be surpassed by this year's figure, as China's continues to open up further sectors -- such as retail and distribution, financial services and transportation -- to foreign investors.
But China's leaders would do well to look closely at who is benefiting most from this phenomenal wave of foreign investment, and why. In some industries, such as consumer electronics, foreign investment has sharpened the competitiveness of Chinese companies like Legend, TCL, and Haier, while delivering vastly lower prices to local consumers. In others, such as automotive, the main winners to date have been multinational companies and their Chinese joint-venture partners who have recently enjoyed profit margins substantially higher than elsewhere in the world.
The lesson is that opening the door to foreign investment is just a first step. If consumers are to benefit, the government must take a liberal approach to regulation that ensures a level playing field and allows competition to flourish, according to new research by the McKinsey Global Institute.
Press reports on China's automotive industry invariably focus on the rapid growth in new vehicle sales, which are on track to make China the world's third-largest auto market by 2007. But the untold story is that the government's policies have mostly benefited foreign automakers and their local joint-venture partners. General Motors, for instance, earned more than $2,300 before tax per vehicle sold in China, compared with $145 in the United States, according to the company's 2003 annual report.
Chinese consumers have paid for this. Two years ago, they paid 70% more for a car than they would for a comparable model in the U.S. or western Europe. Even today, after 18 months of declining prices, Chinese consumers pay 30% to 40% more.
The reason lies in China's automotive policy, historically designed to route foreign technology and capital to a handful of state-owned carmakers. Although the policy was updated in May, its basic premise hasn't changed. Foreign players must still invest through joint ventures and their stake is limited to 50%. Private sector participation -- the key force behind China's emerging global competitiveness in other industries, such as personal computers, mobile handsets, and other consumer electronics -- is restricted. Even under World Trade Organization rules, finished cars will continue to face import tariffs of 25%.
These policies stifle competition and allow inefficient state-owned Chinese manufacturers of vehicle parts to continue making money. Assured of robust margins, foreign automakers have employed the same capital-intensive production methods used in their home markets -- instead of taking advantage of China's low-cost labor. In fact, it takes a greater capital investment to produce every single car in China than it does in Detroit. Yet the Chinese carmakers that this protectionist policy was supposed to support have yet to develop strong stand-alone capabilities in auto assembly. Their cars compete at the low end of the market, while most cars produced by international joint ventures are sold under the foreign brand.
In the consumer-electronics industry, by contrast, the government has taken a relatively hands-off approach. That's largely because the sector was neither considered strategic nor dominated by state-owned enterprises. Few restrictions hinder private Chinese companies from entering the market or state-owned incumbents from expanding into additional product lines. Joint ventures are required in only a few areas and foreign companies are not required to source components locally.
The result: fierce competition among domestic and foreign-invested enterprises, driving consumer prices down by as much as 70% for some products. Demand has exploded, creating new jobs even as state-owned enterprises shed jobs and restructured. The need to compete with the likes of Nokia, Samsung, and Whirlpool has sharpened the skills of the best Chinese companies such as Midea, Galanz and Haier, who now lead the market in many products. The results for multinational investors are mixed; although some are profitable, margins are razor thin.
Foreign direct investment has undoubtedly been good for China in both the automotive and consumer-electronics industries. But in the latter, the benefits have spread to consumers through much lower prices and better product quality and selection. This in turn has allowed the industry to expand and prompted the development of a domestic supply chain as far upstream as semiconductors.
The benefits of foreign investment are only now beginning to spread to consumers in the automotive industry as new production capacity comes online and more foreign players enter the market.
During the past two years, prices for vehicles have declined by as much as 40%, sparking growth in demand, and profit margins for foreign carmakers are beginning to erode. Even so, whether Chinese carmakers will become global competitors is an open question. The new entrants, like Brilliance Chinese Automotive, Chery Automotive, and Greely Automotive, may have the best shot at success. But don't rule out the larger state-owned incumbents either. For instance, Shanghai Automotive is pursuing a very bold international investment strategy to acquire the technology it needs to compete in a more open market.
As China continues to open more sectors of the economy, the lesson is clear: competition matters. Foreign direct investment can spark growth and create national wealth, but competition is needed to spread the benefits to consumers and workers and sharpen the skills of local players. Government policies designed to protect incumbents -- high tariffs, joint-venture requirements, restrictions on market entry and access to capital, for example -- also shield them from pressure to improve. Consumers quite literally pay the price for this.
Mr. Gao is a principal and Mr. Orr is a director in the Shanghai office of McKinsey & Company.
市场竞争使中国消费者受益
经济合作与发展组织(Organisation for Economic Co-operation and Developmen)于7月份新公布的数据显示，中国去年已超过美国成为世界上接受外商直接投资最多的国家。今年中国获得的外商直接投资预计会超过去年530亿美元的水平，因为中国今年还会有更多的领域对外开放，如零售、分销、金融服务和交通等行业。
但如果中国的领导人能够仔细考察一下谁从大量涌入的外国投资中获益最大，以及原因是什么，那中国的经济形势就更好了。在消费电子产品等行业，外商投资一方面磨练了联想(Legend)、TCL和海尔(Haier)等中国企业的竞争力，同时也使中国消费者得以买到大量更便宜的产品。而在汽车制造等行业，迄今为止主要的赢家仍是那些跨国公司及其中国合资伙伴，近来它们在中国获得的利润率要大大高于世界其他地方。
这一现象告诉人们，向外国投资敞开大门仅仅是迈出了第一步。麦肯锡全球研究所(McKinsey Global Institute)新近发表的一份研究报告称，如果要使消费者从中受益，政府必须在监管方面采取开明态度，确保营建一个各方可以公平参与的市场环境，允许市场竞争充分进行。
媒体在报导中国的汽车产业时总是将重点放在新车销售的快速增长上，因为这预示著中国在2007年以前成为世界第三大汽车消费市场已成定局。但被媒体忽略了的一个事实是，从中国政府的汽车产业政策中获益最大的一直是外国汽车制造商及其中国合资伙伴。以通用汽车(General Motors)为例，该公司2003年的年报显示，它在中国每售出一辆车就可获得2,300美元的税前利润，而在美国每卖出一辆车获得的税前利润只有145美元。
通用汽车在中国获得的高额利润都是中国消费者贡献的。两年前，一款汽车在中国的售价要比其同类型号在美国和西欧的售价高出70%。即使是今天，在经历了18个月的价格下滑后，中国消费者仍要多付出30%至40%的购车款。
问题的症结在于中国的汽车产业政策，这一政策从制定伊始就旨在将外国技术和资本导向为数不多的几家国有汽车制造商。虽然这一政策今年5月份时作了修改，但其本质并未改变。外国汽车制造商仍必须通过成立合资企业的方式投资中国市场，而且它们在合资企业的股份也被限定在50%以下。民营企业投资汽车产业则受到限制，而正是这类企业使得中国在个人电脑、移动电话和其他消费类电子产品领域获得了全球竞争力。虽然中国在加入世界贸易组织(World Trade Organization)时承诺下调汽车进口关税，但整车的进口税率仍然达到25%。
中国的汽车产业政策抑制了竞争，使得缺乏效率的国有汽车零部件制造商依然能够获利。由于能够确保获得高利润率，外国汽车制造商选择了在本国采用的资本密集型生产方式在中国生产汽车，而不是想办法利用中国的低成本劳动力优势。事实上，在中国生产一辆车需投入的资本投资要高于底特律。但中国的汽车产业政策旨在保护的那些本国汽车制造商却仍然没有获得独立生产汽车的能力。它们生产的汽车只能在低端市场竞争，它们与跨国公司合资生产的汽车大多以外国品牌出售。
与汽车领域相反，中国政府对消费电子产品业却采取了相对放任的态度。这主要是因为，消费电子产品业既未被认为是战略性行业，国有企业也未在这一行业中居主导地位。由于限制不多，民营企业可以较为容易地进入消费电子产品市场，而业内的国有企业也可以自主决定扩大产品种类。这一行业中只有为数不多的几个领域规定外资只能以合资方式投资，且投资该行业的外国公司并未被要求只能在本地采购零部件。
其结果就是：由于国内企业和外商投资企业在中国的消费电子产品市场展开了激烈竞争，某些产品的价格下跌了70%之多。由于市场需求呈爆炸性增长，尽管业内的国有企业在不断减员和重组，但该行业的新增就业机会仍在大量涌现。在与诺基亚(Nokia)、三星(Samsung)和惠而浦(Whirlpool)等跨国公司的竞争中，美的(Midea)、格兰仕(Galanz)和海尔这类中国最优秀企业的竞争力大为增强，它们许多产品的市场占有率目前都位居前列。激烈的市场竞争对跨国公司的影响好坏参半，它们中的一些虽然仍能在中国市场上获利，但利润率却已极薄。
外商直接投资对中国的汽车制造业和消费电子产品行业无疑都是有利的。但在消费电子产品行业，外资加入竞争导致产品价格大幅降低，产品质量改善，产品更加丰富，从而使广大消费者都能从中得到好处。这反过来又促进了中国消费电子产业的发展，并使产业链不断向上延伸，甚至该行业所需的半导体现在国内也能供应。
而在汽车制造业方面，随著生产能力的增加以及更多的外国公司进入中国汽车市场，中国消费者终于可以从外商投资中获益了。
过去两年中，汽车售价下跌了40%之多，这一方面刺激了市场需求，另一方面也使外国汽车制造商的在华利润率开始下降。即便如此，中国本土的汽车制造商能否成功立足世界市场依然很成问题。华晨中国汽车(Brilliance Chinese Automotive)、奇瑞汽车(Chery Automotive)和吉利汽车(Greely Automotive)获得成功的可能性或许最大。但大型国有汽车制造商取得成功的可能性也不能排除。例如，为了获得应对更激烈竞争所需的生产技术，上海汽车(Shanghai Automotive)就采取了非常大胆的国际投资策略。
随著中国将更多的领域对外开放，人们需要明白的一点是，确保充分的市场竞争至关重要。外商直接投资能促进经济的增长并为中国创造财富，但要使中国的普通消费者和劳动者从中受益，中国企业的竞争力得到提高，竞争是必不可少的。而中国旨在保护少数国有企业的汽车产业政策──如高关税、合资规定、市场准入及融资方面的限制，实际上反而不利于国有企业面对竞争提高自身实力。由此造成的不利影响最终都要由普通消费者来承受。
