Could ‘Imported from Detroit’ Be Good for China Car Market?

Last week, Apple Chief Executive Tim Cook said that his company would soon be manufacturing some of its Mac computers in the U.S. GE CEO Jeffrey Immelt wrote earlier this year in the Harvard Business Review that “today we are outsourcing less and producing more in the United States.”

The Detroit Three could play a larger part in this American manufacturing renewal – and they would, if not for China’s lopsided trade rules.

American automakers manufacture in China simply because it is impossible to compete on price unless vehicles are made inside China. China’s punitive import duties together with value-added taxes and other luxury fees double the price of imported vehicles. A Jeep Grand Cherokee imported from America costs more than $80,000 after taxes and fees in China. That exact same vehicle, built in the U.S., runs about $40,000.

Result: Of the projected 2.3 million American-branded cars Chinese will buy this year, an astonishing 96% will be made in China.

During the U.S. presidential campaign, rumors swirled that Fiat-owned Chrysler might move Jeep production to China. An avalanche of media attention ensued, obliging CEO Sergio Marchionne to issue a public statement: “Jeep production will not be moved from the United States to China.”

What the statement doesn’t say is that to grow in China, Jeep needs to produce vehicles in China In fact, Jeep hopes to secure a Chinese assembly license in 2013.

As Beijing’s rigid trade rules now stand, building inside China is the only way for Jeep to reach more Chinese buyers.