SHANGHAI AUTO SHOW: China's challenge for Australia

The Australian vehicle manufacturing industry needs to prepare for the rapid development of China as an automotive engineering powerhouse -- or risk losing work to foreign countries.

That's the message from the ex-pat Australian boss of General Motors in China, Kevin Wale, who has overseen the country's phenomenal growth in his six-year tenure there.

The former Holden executive who has had several senior overseas postings within the GM world says China is maturing rapidly as a centre of automotive expertise -- not only for manufacturing but for design, technology and engineering.

It was the latter skills that Australia was hoping to hold-on to if local car factories were ever forced to close.

General Motors has had a design studio in China for 15 years -- and already it's bigger than Holden's facility. Other car makers are establishing design and engineering centres in China as it has been the world's biggest car market for the past two years and doesn't look like being challenged anytime soon.

The China Automotive Engineering Research Institute (CAERI), a government subsidiary established in 2007, has the ability to test new vehicles for emissions and crash protection, employs 1400 staff including technicians, professors, senior engineers, and staff with a doctor's or a master's degree. CAERI's facility occupies an area of 130,800 square metres. More facilities such as these are being planned both by the Chinese government and car makers and suppliers.

"[China] will be a dominant player in the region, there's no question," Wale told the Carsales Network at Auto Shanghai yesterday.

"China is going to have enormous capacity to develop technical skills, engineering skills and design skills, so they're going to be a force in their own right.

"So Holden is going to have to continue to do what it does best, which is find a niche where it excels and make the most of it.

"[Australia] is not big enough to dominate any of the Asian countries. China is going to be bigger than Japan. Australia could never dominate Japan, so over a period of time, China is going to build up its capability in its industrial chain, including design, manufacturing, tooling, and suppliers.

"And Australia's role will be to continue to work out where it has a unique capability and exploit its knowledge, rear-wheel-drive, ride and handling, design, whatever it is that they choose."

Wale said Holden, with its Melbourne design and engineering centre and Adelaide car factory, was well placed and well regarded by General Motors -- but the company still had to fend for itself.

"Holden is well looked after by GM and is very well regarded and they'll continue to leverage its assets," Wale said. "But it's like a footballer, once they assume they're in the side for life, and they don't start playing for their position each week, life changes. It's a big world out there and they need to stay focused."

Wale said Holden had the skills to keep pace with the change in China but would not comment on the other two car makers in Australia -- Ford and Toyota -- as they are rival brands.

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