Beijing show for dream machines

BEIJING -- Chairman Mao surely is turning in his mausoleum.

Complete with pulsating music, anorexic models in shimmering skin-tight dresses and the best and most advanced vehicles from the suburbs of America and the salons of Europe, June's Auto China '96 provided even more evidence that the Cultural Revolution is a fading memory.

This show, now the second largest in Asia after Tokyo's biennial affair, was much more about feeding the fantasies of China's escalating consumerism than about what vehicle would be built in the next major joint venture by the Western automaker lucky enough to win the government's latest round of "Let's Make a Deal."

Ferrari's F40; a lemon-yellow concept roadster called the GT5000, hand built by two dozen Beijing Auto Industry Group Co. workers; Hyundai's Gila concept roadster, a 12-cyl. BMW 750 and a royal blue Dodge Viper with two parallel white stripes running from bumper to bumper. These were but a few of the dream machines featured in the week-long show that drew about 360,000 people. General Motors Corp. even brought one of its cavernous Suburbans, a vehicle bigger than many Beijing resident's homes.

Never mind that most of the crowd came on foot, by bicycle or in one of the ubiquitous little red TJ7100 Tianjin Charade taxis.

"It is important that people see what they might have someday," says Wang Jiangang, a reporter who covers the Chinese auto industry for Xinhua News Agency. "I don't own a car, but maybe I can buy one in five years."

Yes, China's economy is still growing at 8% to 9% this year, slower than the last few years, but a pace most of the Western world would die for. Color televisions, washing machines, refrigerators and cellular telephones are increasingly common status symbols of what the gradual economic reforms are generating for many Chinese citizens, at least in the largest cities.

Still, there is an awkward disconnect between the show's glitz and glitter and the smog-choked streets of this burgeoning metropolis of 11 million residents. China remains a centrally planned and controlled society, although one that's convincingly earnest about competing in the global economy. The Five-Year Plan is gospel. Quality is defined by government regulation. There's even a green book with rules and regulations about how to control quality.

Most of the joint ventures financed through foreign partners comply easily, but those who don't can pay with sharply reduced salaries, or even their lives.

As recently as 1992, 13 plant managers were shot for various regulatory violations.

"The people probably were caught in larceny rather than quality, but it's reported as a quality violation because quality in the Chinese translation is a word that effects the whole environment," says Franc J. Krebs, president of Beijing Jeep Corp. Ltd.

Earlier this year when the Beijing city government deemed that cars with engines larger than 1L and all sport/utility vehicles, minivans and trucks could only be driven every other day, Beijing Jeep saw sales of its BJ2020 fall by 40% in the capital city compared with year-ago levels for March and April.

Of the nearly 1.4 million vehicles sold in China last year, passenger cars accounted for about 285,000, and of those, only about 4% were bought by individuals. There's still no system for issuing credit for buying a car. Sales networks are just starting to use basic marketing concepts.

As traffic in the cities mushrooms into near-gridlock, even more regulations sprout in well-meaning, but dubious attempts to control what may be uncontrollable. China is a culture of paradoxes. The Ninth Five-Year Plan professes to encourage private ownership of cars and houses. But in the city of Shanghai, those willing and financially able to spring for their first set of gasoline-powered four wheels must pay 150,000 renminbi (about $18,000) for the right to buy their own car.

Just where this leaves the concept of a $7,000 "Family Car" is unclear, but there is an emerging consensus that it will be later than sooner.

Most of the 8,000 production workers at Beijing Jeep earn about 1,400 renminbi per month, or $168. That puts them well above China's per-capita annual income of $530. But even with government-subsidized housing that may keep their monthly rent below 160 renminbi ($19), owning a BJ2020, ranging in price between 48,000 renminbi ($5,700) and 72,000 renminbi ($8,600) is still out of reach.

"We think there is no market in China for one family car like the old Beetle in Germany after World War II," says Klaus Luttman, senior manager for sales in Volkswagen AG's Beijing office. "There is a demand for a big luxury car, a pickup, small cars and midsize sedans."

Says Beijing Jeep's Mr. Krebs, "If China revises its taxing policies, there will be a family car. If it doesn't, there won't."