Chinese auto brands need to work on branding and opening up new markets to make the industry sustainable, the China Economy Weekly reported.   The fierce competition Chinese auto brands face in the export market is also a form of rivalry between different Chinese auto brands.   According to the statistics of China Customs, the export price of an auto unit has fallen to 7,039 US dollars per car during the first four months of 2006. Since 2003, although the number of cars exported has risen rapidly, the dollar value of exports is declining every year.   The source of price wars The concentration of export markets is a factor contributing to price wars. Currently, 86 percent of exports are targeted at Africa and the Middle East.   China’s auto sector is undergoing an important development stage in which it faces many contradictions. On the one hand, unreasonably low prices with similar levels of quality risk overseas trade conflicts. On the other hand, price wars bring about the inevitable decline of quality, inadequate branding strategies, and negative reputation of both the brands and their products.   Director of Shanghai Maple Automobile, Xu Gang, commented that “price wars between national auto brands are not beneficial to their own companies but to overseas brands instead. We should strive for a stable ground in the export market, efficient branding and business development strategies instead.”   Xu added that different overseas market require varied development strategies: “For a market such as Libya, we should work on services and branding.  For more mature markets such as Egypt and Syria, priority should be given to finding a solution for overstocks.  For new markets such as Ukraine and Algeria, aggressive business strategies are needed.  For other markets, careful investment is preferable.”   Shang Yuguai, director of the marketing department of Great Wall Motors, said that many Chinese enterprises even give up their own brand images for possible overseas sales. It is not desirable if Chinese brands only want to gain a decent share of such markets as North America and try to compete with Toyota and Hyundai.   Potential conflicts In developed countries where repair staff need to be well-trained, stock of accessories requires high cost and other after-sales services such as product recall are emphasized, the entrance of Chinese auto brands into these markets is impossible if price wars are their only strategy to gain overseas market share.   Li Wangli, a senior official with the State Development and Reform Commission, said that since Mainland auto relies on cheap manufacturing cost instead of the value added brands to generate income, exported auto faces obstacles aboard. It risks embarking on the same development path as the textile and toys industries.   New government measures An official with the Ministry of Commerce said that new policies, which are drafted and currently under review, is focusing on combating unreasonable price cuts on auto exports and guaranteeing that quality as well as standards are maintained. If the policies are thoroughly executed, experts said that they can be beneficial to Mainland’s overseas auto market development and avoid possible foreign intervention.   Overall reform is needed Shao Qihui, an official with the Society of Automotive Engineers of China, said that the national auto sector needs to widen the market space by cultivating access to new markets and varieties.   “Agricultural auto in China has huge potential. China’s agricultural motors ownership rate is around 30 percent which is a lot lower than 80 percent or above in developed countries. This provides a profitable market for Mainland auto corporations,” he added, “the upcoming 1000 million yuan government investment in road constructions in agricultural areas provide the prerequisite for the development of this market.”