NANCHANG, China — On a clear morning, hundreds of uniformed workers at Jiangling Motors stood at attention as a procession of 200 Landwind sport utility vehicles, adorned with red ribbons, made their way toward Shanghai's port on the way to Belgium.
Firecrackers popped. Red banners fluttered in the wind. China's auto industry had begun its march into Europe.
"I sure felt very happy and proud," said Xiong Wu, a senior Jiangling manager, walking through the assembly plant on a recent day.
Chinese factories, already filling the world's stores with toys, textiles and appliances, are starting to make inroads into the West's automobile market. The Middle Kingdom is expected to produce 6.4 million cars and trucks next year and surpass Germany to become the third-largest vehicle manufacturer in the world.
Although most of the vehicles will be for China's own burgeoning market, a growing number of the nation's 100-plus automakers are also eyeing Europe and North America.
Hebei Zhongxing Automobile in Baoding, about 85 miles south of Beijing, is negotiating with Mel Rapton Honda in Sacramento to sell its light trucks and SUVs priced at $10,000 -- about half the cost of the lowest-priced SUV currently on the U.S. market. It's already exporting to markets elsewhere in Asia and to Africa and Russia.
Brilliance China Automotive, which has a joint venture with BMW, will soon be selling its sedans in Germany. Geely, maker of a low-priced sports car called CD, or China Dragon, has similar plans.
And Chery, a well-financed state-owned company, is aiming to ship cars to the United States in 2007 at an annual rate of 250,000. The company, based in the Yangtze River town of Wuhu in Anhui province, is preparing its launch in the United States with Malcolm Bricklin, the 66-year-old Philadelphia car buff who brought the ultra-cheap Yugo to America in the 1980s.
Chery declined to comment, but Bricklin was eager to talk about his new company, New York-based Visionary Vehicles. He said he had signed up 40 dealers in the United States to sell five Chery models. Unlike the cut-rate cars sold in China, Bricklin said, the Chery vehicles destined for the U.S. market will be luxury models that will sell for $20,000.
"It's not going to be like low-priced textiles," he said.
China's entry into the world market has captured the attention of Detroit, Germany and Japan. It comes at a time when America's Big Three carmakers are struggling to keep up with foreign rivals, in large part because of soaring expenses for their retirees and graying workforces.
Many expect that China will use its armies of low-wage workers -- as it has done in the textile and electronics industries -- to produce cheaper vehicles and snatch market share from established automakers.
General Motors, Ford and DaimlerChrysler shell out on average $65 an hour for each factory employee, including health benefits. That's about a third more than what Japanese car firms pay their U.S. production workers. And it's about 50 times the rate at Chinese factories like Jiangling's.
When made-in-China cars arrive on U.S. shores, analysts say, they could trigger political backlash and protests more virulent than those over the flood of Chinese socks and bras.
"There could be a major clash," said Michael Dunne, president of Automotive Resources Asia, a research and consulting firm in Shanghai.
Members of the United Auto Workers union at GM recently agreed to absorb billions of dollars of healthcare costs, and UAW workers at auto parts maker Delphi Corp. have been asked to take a two-thirds pay cut. UAW officials didn't respond to repeated interview requests.
Given the challenges of meeting U.S. auto emission, safety and quality requirements, some experts believe that it'll be some years before China poses a serious competitive threat.
And Chinese automakers are already learning about rigid safety standards and cutthroat competition.
Barely two months after the first batch of Landwinds arrived in Antwerp, the SUV was rated zero in a safety test by an auto club in Germany. The results were reported on the eve of a major auto show in Frankfurt, where the Landwind and other Chinese cars were on display.
The Frankfurt show was meant to be a coming-out party for Landwind, but marketing manager Liu Hongshan remembered how the German auto club, ADAC, distributed copies of the crash-test report at the exhibition.
"They were just a few booths away from us," he said with obvious irritation.
Liu, who at 33 is part of China's new generation of globally minded managers, tried to fight back by publicizing positive results from a separate crash test conducted by a German inspection firm hired by Jiangling. But the damage had been done. Sales of the Landwind, priced at about $21,000, or half the price of SUVs in the local market, still haven't recovered. The company has sold fewer than 1,000 in Western Europe since the May ceremony at the Nanchang plant.