Rising Chinese interest in the Indian auto and earth moving equipment industry heats up competitionSince November 2009, the People's Republic of China has been the larg-est automotive market in the world. The country produced 13.79 million automobiles in 2009. Of these, 8 million were passenger cars (sedans, sport utility vehicles (SUV), multi-purpose vehicles (MPV) and crossovers), and 3.41 million were commercial vehicles (buses, trucks, and tractors). Of the automobiles produced in China, 44.3% are local brands like BYD, Lifan, Chang'an (Chana), Geely, Chery, Hafei, Jianghuai (JAC), Great Wall, Roewe, etc). The rest are joint ventures with leading global automakers like Volkswagen, Mitsubishi, General Motors, Hyundai, Nissan, Honda, Toyota, and more; while Volvo Cars, a well known European brand, is now owned by Geely. But most cars manufactured in China are sold within China. In 2009, 369,600 cars were claimed to have been exported. In the year 2009, the number of registered cars, buses, vans, and trucks on the road in China reached 62 million. By the year 2020 this number is expected to exceed 200 million. If the industry sources are to be believed, the Chinese auto market will grow ten fold between 2005 and 2030.In comparison, the Indian auto market is much smaller, even though the growth rates may be comparable. Home to the world's second largest two wheeler industry, amounting to annual sales of over 8.5 million in 2009, the Indian auto industry in the year 2009 emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. Surpassing China as an exporter of automobiles, India enjoys the presence of most global auto brands apart from the home grown ones like Tata Motors, Ashok Leyland, TVS Motors, M&M and Bajaj Auto. India is also increasingly witnessing the rising interest of Chinese auto makers; albeit with the help of local manufacturers who seem to be in a position to profit from the economies of scale, and lower costs offered by Chinese auto makers and suppliers. The first known interest of the Chinese auto industry in India could be attributed to the launch of 100cc motorcycle called Cosmo in 2001 by Delhi-based Monto Motors. The company imported CKD kits from the Chinese bike manufacturer Chongqing Lifan, and assembled them at its Alwar facility. Fast forward to 2005, and Asia MotorWorks, a commercial vehicle manufacturer, launched its medium and heavy-duty range of trucks with fully-built cabins imported from Chinese CV maker FAW. In 2009, tiding over rough whether, General Motors got its Chinese partner, SAIC to pick up a 50% stake in the Indian operations. With SAIC commanding half the stake, preparations are already on to launch six new models (including the Wuling van), and close to 15 fuel variants over the next two years in India. Most SAIC offerings, it is claimed, will be positioned in the light commercial vehicle market segment. The Indian commercial vehicle market commands nearly 40% of the Indian auto market. It is therefore not surprising that many Chinese commercial vehicle manufacturers are interested. The JCBL air-conditioned coaches that are found on Mumbai roads under 'BEST' are a product of JCBL's tie-up with King Long of China. While JCBL manufactures bus bodies for Swaraj Mazda, and others, King Long is rated as the biggest Asian bus manufacturer with an annual supply of over 10,000 buses. The venture with JCBL is the first ever overseas venture by King Long. Post the entry of King Long with the help of JCBL, many Chinese commercial vehicle manufacturers have shown interest in the Indian market - manufacturers like Beiqi Foton, Jianghuai Automobile Company and Sinotruk. In passenger cars, the Chinese invasion is showing up in arrangements like the ones worked by Premier and Force Motors. The compact Premier Rio looks very similar to the Zotye Nomad. The reason is that the Nomad is imported in CKD form by Premier, and assembled at its Pune plant. The process involves Premier marrying the body with a 1.5-litre Peugeot diesel powertrain, TUD5. The TUD5 unit did duty in the Peugeot 309 the company manufactured in the late 90s in collaboration with Peugeot of France. Peugeot in the meanwhile has announced that it would be making a re-entry into India, and would soon set up a Rs 4000-crore facility in Gujarat. Like the Premier Rio, Force One, a luxury SUV launched by Force Motors recently employs body panels that are, according to informed sources, procured from Guangdong Foday of China. It is therefore no surprise that the Force One looks similar to the Explorer III, a Chinese SUV that finds a mention in Guangdong Foday's product portfolio. The chassis of Force One has however been designed completely in-house. While Lotus Engineering of UK was roped in to fine-tune the chassis and dynamics, the powertrian and drivetrain are made under license from Mercedes-Benz, for whose Indian passenger car operations, the company assembles engines out of kits imported from Germany. If the image of a luxury SUV is generated by the Force One, the Chinese auto industry today has come to acquire highly respected brands like Volvo Car Corporation and acquaint itself with global luxury brands like Mercedes Benz, Volkswagen, General Motors, Fiat, and more. The fact that most of these manufacturers are investing, or have already invested in India, means that the journey of Chinese auto makers in India may not be as tough as it seems. Volvo Cars' presence in the luxury passenger car segment in India is testimony that the Chinese are here in more segments than the low cost ones. Interestingly, manufacturers like Mahindra & Mahindra, and Tata Motors are already into China, or looking at the prospect of setting up facilities in China rather seriously. Speaking at the inauguration of Jaguar Land Rover assembly at Pune, Dr Ralf Speth, CEO of Jaguar Land Rover, is known to have said that his company was looking at establishing ties with a local partner for production in China. At the level of auto components, Chinese suppliers are said to be increasingly finding their way into the Indian market, threatening to upset the joy ride of local auto component manufacturers. Earlier this year, Mr Jayant Davar, managing director of Sandhar Locking Devices, and the past president of ACMA is known to have expressed that for the past ten years the imports of auto components from China has been increasing 30 to 35% on a year-on-year basis. Davar is also known to have termed this as alarming for the domestic component industry. Fuelling the trend, claim auto industry sources, is the rapid growth of the Indian auto industry, coming out of recession. They add that even after the component suppliers have undertaken aggressive expansion drives, there remains a gap - a gap that highlights capacity crunch, and especially in the case of batteries and tyres. The other reason is cost. Pointing at the same, Davar is known to have commented that the cost of land, power and raw material is lesser in China as compared to India. He is also known to have pointed at the lower rate of interest. While new tyre regulations are already have a deterrent effect on fly-by-night operators, and imports, industry sources claim that Chinese products are at least 13-15% cheaper than the products offered by Indian component makers. With market fluctuations and shifting economic situations, how much of this is true is worth investigating. The fact, however, is that the Chinese auto suppliers are as much making a mark in India as they are in other markets. This is quite akin to the way the Chinese automakers are toiling to penetrate into newer markets of the world. While Chinese auto component suppliers are likely to accompany their auto clients as they work their way into the newer markets, in India, in the earth moving equipment sector, Chinese companies like the Sany Group have already set up a manufacturing facility in India. Companies like Terex and Manitowoc are using their China connection to bring heavy cranes and other, more specialised equipment to India. One example is the display of Dongyue GT25-5A truck mounted crane by Manitowoc at the recent bCIndia exhibition held at Mumbai earlier this year. The participation of Chinese industry extends far beyond the Indian auto and earth moving equipment industry. Chinese products are found in various industrial sectors like automation, electronics, material handling equipment, machine tools, and more.The primary advantage the Chinese products offer is cost. An advantage that is powered by the country's ability to do great volumes, and support the endeavour through a well-engineered infrastructure.