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Why carmakers are speeding to China

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Kai Ryssdal: General Motors announced another 1,600 layoffs today. Mostly white-collar workers as the company restructures itself to cut costs. Still, as bad as things are here, GM is expecting to increase its sales in a key overseas market. That would be the alternative economic universe known as China, where the economy’s still growing at better than 6 percent. The Shanghai International Auto Show opened today. Marketplace’s Scott Tong was there.

SCOTT TONG: The world’s auto brands rolled into China today, complete with live bands and acrobats and models in miniskirts and halter tops. Michael Dunne is with J.D. Power and Associates.

MICHAEL Dunne: That’s why you see such a big turnout here. China is the center of the action for the auto market worldwide.

That’s why Porsche picked Shanghai over New York to debut its new coupe: The Panamera goes for $90,000. Company executive Helmut Broeker says China is the company’s number-three market, behind the U.S. and Germany.

HELMUT Broeker: We wanted to show the China community that we have received the message that they like Porsches, and we wanted to give them something back in their home market.

But the brand that’s even hotter than Porsche here is GM’s Buick. In China, American brands are considered high-quality and durable. GM Vice President Nick Reilly vowed to protect the Buick brand as the company restructures.

NICK Reilly: Part of the reason is its success in China. Although the U.S. government asked us to look at how many brands we should continue with, we have made it clear that we will maintain Buick, and they have now accepted that.

And automakers accept that the future is smaller, greener cars.

FORD REPRESENTATIVE: Ford is committed to making our world a cleaner, greener place to live.

Ford is showing off a cleaner transmission technology called Ecoboost. GM and Toyota display plug-in hybrids. But Bill Russo of consultancy Synergistics is watching the Chinese competition. Most major Chinese brands at the show are displaying their own alternative energy vehicles. And they have the financial backing of Beijing.

BILL Russo: China has more capacity to fund the next generation of development. When you know your opponent is the weakest is when you want to go on the offensive.

The Chinese government is also giving incentives to consumers. For the last three months, more new cars have sold here than in the U.S.

At the Shanghai auto show, I’m Scott Tong for Marketplace.

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