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Newsletter
December 2004 |
SourceGlobal® with presence
in US, China, & India, offers global
sourcing services to the Heavy-Equipment OEMs in North-America. |
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China
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| Are You Ready for
Chinese Currency Re-Valuation? |
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American
manufacturers contend that China's practice of pegging the Renminbi
(Yuan) to the US Dollar at a fixed rate has led the Chinese currency to
be artificially undervalued by as much as 40 percent, giving Chinese
exports a tremendous competitive advantage over U.S. products. At
the same time Dollar has fallen to a four-and-a-half year low against
the Japanese Yen and the Euro, making Chinese exports even more
attractive to Japan and Europe.
Issue of currency re-valuation hangs as a sword over the head of
Chinese exporters whose prices may rise by 40%, making them less
competitive in the world. While it is unlikely that the Chinese
government will suddenly float the Renminbi due to the shock to China's
economy, some form of revaluation is widely seen as inevitable
Additionally, some fear that after years of fast growth the Chinese
economy is heading for a crash-landing with high inflation that could
result sudden slow-down in foreign investments.
For additional detail:
Chinese
growth rate to halve by 2006
Bush, Hu discuss Chinese currency
China's
Economy
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| Overheating in Steel Sector |
China's
steel sector is rolling on a sound track with overheated investment
curbed and steel prices increasing at a "reasonable" pace. China's
steel output will continue to grow in order to feed a booming economy
and that the full-year steel's output may increase 16.9 per cent to 260
million tons.
China has become India's largest iron ore buyer since 2001. It imported
approximately 30 million tons of Indian iron ore in the first seven
months of the year, accounting for 26 per cent of its total imports.
For additional detail:
Steel shortage halts work at Nissan plants in Japan
Hyundai planning strategy for steel |
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India
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India Firms Buying Abroad
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India
firms buying abroad Indian firms, such as Sundram Fastener's Ltd.,
Bharat Forge and others, are
looking to grow volumes by acquisition to make up for the lower margins
which are caused by rising steel prices. Many multi-national
corporations are more comfortable sourcing from China and Europe so
large Indian firms have set up operations in those countries.
Additionally, India's domestic market is smaller than China and
Europe which provides Indian firms the opportunity to grow faster than
the Indian market would allow. Many of the Indian companies are
looking at acquisitions in US and Europe to gain access to
markets/customers and supply chains.
For additional detail:
Bharat
Forge buying in Germany
India wants to lure US auto supply jobs
The
Raja of Steel
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| A Hub for Small Car Production |
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Despite
widespread focus on China as "the
place to be" for
global
sourcing, India may emerge as a dominant hub for small
car production. However India has a window of opportunity to
develop a
thriving small car manufacturing industry. China is likely to focus on
its fast growing domestic market and faces stiff tariffs
until 2010 in the ASEAN region, making exports uncompetitive.
Thailand is
a strong competitor that could build on its success in utility
vehicle manufacturing. However, Thailand has not yet focused on
small
car
production, leaving the door open to India. Of course there are
significant hurdles to overcome,
including
serious infrastructure problems. The largest challenge may be
for Indian manufacturers to develop a reputation for quality.
Currently only select manufacturers are noted for their quality, though
the situation is improving rapidly.
India is one of nine
countries to have developed and manufactured
passenger vehicles without outside assistance. The country has
a well deserved reputation as a source of engineering talent.
Furthermore, India has a strong and rapidly growing domestic market for
small cars. Hyundai India sold 91,356 vehicles in the first six
months
of 2004;
up 39% from the previous year, with exports accounting for roughly
one-third of production. Both
Suzuki and Hyundai have committed to making India a worldwide hub for
small car production.
For additional detail:
India's Auto Industry Comes of Age
Can India Become a Global Sourcing Hub
for Small Cars? |
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Quick Facts
India
Quarterly Vehicle Sales
Passenger
Vehicles
Total: 230,000
Cars: 177,100
21% Growth YOY
Light
Commercial Vehicles
Total: 20,665
3.5 Ton: 10,400
Med/Hvy
Comm. Vehicles
Total: 35,740
12-16.5 Ton: 15,744
Two
Wheeled
Motorcycles:110,000
Mopeds:170,000
9.9% Growth YOY |
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