Wuhan is poised to be China's Motor City

Yang Jian is managing editor of Automotive News China.Yang Jian is managing editor of Automotive News China.
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Several Chinese cities are jostling for the title of "The Chinese Detroit" as they vie for bragging rights as the country's biggest auto producer.

But my recent trip to Wuhan has convinced me that the city in central China will win the title.

Four foreign automakers -- Nissan Motor Co., PSA/Peugeot-Citroen, Renault and Honda Motor Co. -- have set up shop in Wuhan, where they do business with their Chinese partner, Dongfeng Motor Corp.

A fifth company, General Motors, is on the way with its own joint-venture partner, SAIC Motor Corp. And yet another global player, Hyundai Motor Co., is thinking about building a plant here.

As these companies expand, Wuhan will grow as well. In a decade or so, the city will be transformed into a global hub of car and truck production.

Yet, Wuhan has not acquired the sophistication of Shanghai, Beijing or Guangzhou.

Wuhan, the capital of the Hubei province, used to be a lot more important to China's politics and economy than it is today. This is the city where the imperial soldiers of the Qing Dynasty revolted 102 years ago, leading to the collapse of China's last dynasty.

Before China adopted economic reforms in the late 1970s, it was still a major industrial hub. But over the past thirty years, China's coastal cities have left Wuhan in the dust, burdened by poorly managed state-owned enterprises left over from China's Stalinist-era economy.

This is something one can easily notice by walking around a bit in the city. I spent three days there recently to attend an auto industry forum -- my first visit to this city.

There is a newly built highway in the city's outer reaches that connects the airport to the state guesthouse where the automotive forum was held.

But much of the city's inner neighborhoods are very old, with dilapidated houses and potholed streets.

Thanks to its underdeveloped economy, Wuhan is still a relatively cheap place to live, with apartments that cost a fifth as much as housing in Beijing and Shanghai.

Because of low living costs, labor costs in Wuhan are also lower than cities in coastal China regions.

But Wuhan is home to Dongfeng Motor Corp., a major state-owned automaker. And Dongfeng is a magnet for growth.

Nissan, Honda and PSA have set up joint ventures with Dongfeng in Wuhan. Renault recently received government permission to produce vehicles with Dongfeng.

Other global automakers are coming, too. General Motors' joint venture with SAIC Motors is constructing a plant in the city.

And as global automakers set up shop here, domestic and foreign suppliers have moved to Wuhan to supply automakers.

Wuhan's biggest advantage is not its well-established supply base, or even its bevy of international automakers, but its unique geographic location.

With two rivers -- the Yangtze and Hanshui -- and one of China's trunk railway lines running through it, Wuhan affords easy access to China's central, southwest, northern and eastern regions.

That is why Wuhan was called the Gateway to Nine Provinces in ancient China. "Nine" in ancient Chinese means many. There is no other Chinese city so conveniently located.

Wuhan-based joint ventures of Nissan, Honda and PSA produce a total of 1.35 million vehicles a year. That has made Wuhan the second largest auto production center in China, behind Shanghai.

By 2016, after the new GM and Renault factories begin output, Wuhan's assembly plants will build up to 3 million vehicles each year. That will allow it to overtake Shanghai as the country's largest auto production center.

If you still doubt Wuhan's prospects to claim the title of China's Motor City, here's some fresh evidence: Hyundai Motor Co.'s joint venture sent executives to Wuhan last week to talk to city officials about possible plans to build an assembly plant there.

The Korean auto giant currently produces vehicles only in Beijing. Will Hyundai expand into Wuhan? You won't find a more suitable location for production.

You can reach Yang Jian at yangjian@autonewschina.com.

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