Ford to Issue Hong Kong Dollar Bond; Triple
China Auto Production
Ford plans to issue a HK$1 billion dollar bond to finance
its production needs in Asia, with main focus on tripling
its auto production at its China plant in Chongqing.
The retail bond will pay 0.1 percent interest on deposits,
which rose to HK$1.8 trillion at the end of August, compared
with HK$1.1 trillion in 1997.
Ford plans to triple its production from the current
50,000 units to 150,000 units at its Chongqing factory
in Sichuan. The models made are Mondeo and Fiesta cars.
In the past year, China's sales of automobiles have been
growing at a fast clip, with Volkswagen
as the market share leader. The company has had a presence
in China for nearly 20 years, and has wide brand recognition
in China, which has given it a major advantage in the
market.
In the past year, major auto makers including GM,
Volvo
, Toyota,
Daimler
Chrysler , BMW,
and Visteon
have all moved aggressively to expand their presence in
the China market. This does not include the many local
Chinese manufacturers who garner support and are patronized
on the provincial level by local governments. Some Chinese
economists have stated that there is a danger of oversupply,
and the government should move to rationalize
the industry.
China Business Strategy believes that
there will be an aggressive price war in China in 2-3
years time as makers move to expand China domestic market
share. The winners will be those with the deepest cash
reserves, lowest manufacturing costs and best customer
satisfaction.
Since Chinese auto workers are efficient, highly productive
and make high-quality automobiles, most of the makers
will seek to expand exports of China production to other
markets, and will try to consolidate global manufacturing
in China so they can benefit from lower manufacturing
costs.
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