China and India will rebuild the auto industry

China and India could reshape the global auto industry and pose a significant competitive threat in coming years, executives from the world's top carmakers said at the Detroit auto show. "They are a very credible threat and we discount anyone at our peril," John Mendel, vice president in charge of sales at American Honda Motor, said Tuesday. While the globally competitive nature of the automotive industry requires mass economies of scale, the relatively young Chinese and Indian manufacturers are ramping up quickly, Mendel noted. And the Chinese automakers buying brands like Hummer and Volvo are gaining access to a valuable distribution network, critical technology and " instant credibility," he told AFP. India's Tata Motors will take its opening shot at the US market Thursday, when it brings the Nano minicar to the Detroit science center to show Motor City what the world's cheapest car looks like. Build Your Dreams Motor (BYD) brought its four- door electric e6 straight to the floor of the auto show where it vowed Tuesday to become the first Chinese automaker to enter the United States at the end of this year. Meanwhile, both countries are becoming increasingly important markets in the global sales strategy of top automakers with China surpassing the United States in total sales volume last year and Indian sales expected to double by 2016. Toyota's chief of US automotive operations expressed skepticism that either BYD or Tata would make a significant mark here in the short term. "It's not so easy to come walking into a market and develop a product and distribution network," Don Esmond said in an interview on the sidelines of the auto show. "A lot of it's going to depend on who does the best job of listening to the customer and has the ability technically to deliver the product," he said. "Whether it be Toyota, GM, Ford or Chrysler, we have more resources, more manufacturing capacities and more technical development available here so we should be able to deliver a better product." Carlos Tavares, Nissan's executive vice president in charge of the Americas, disagreed. "I think it's a mid-term prospective... not 10 years," he said, noting the success of Korean automakers Hyundai and Kia in breaking into the US market, overcoming quality concerns and becoming major players. Affordability will be a key driver in the industry in the coming years and China and India will offer automakers an important testing ground for pushing the boundaries, Tavares said. "What we can learn from China and from India is not so complex," he said in an interview. "It's about determining the level of quality the consumer expects. It's then about reducing operating costs which will bring you to fuel efficiency." Ford chief executive officer Alan Mulally said that while "China's going to be a force going forward" and India is not too far behind, the real competitive threat could come from unfair trade practices. "We expect the auto world industry to continue to evolve," Mulally told a conference hosted by Automotive News. "There is no reason that if we get to global trade rules that we can't compete with the best of the world."

Property price rising in China

Chinese property prices rose at their fastest annual rate in 18 months in December, official figures show. Real estate prices rose by 7.8 % from a year ago - up from the 5.7 % annual rise seen in November and renewing fears that an asset bubble is developing. Chinese authorities have expressed concerns that property prices are rising too fast. On Tuesday, China's central bank announced measures to curb lending in order to reduce real estate investment. Lending boom Last year, Chinese banks issued $1.5 trillion ( £932 bn) in loans in order to boost economic growth - with a large proportion being used to invest in property. One of the leading rating agencies, Fitch Ratings, has been among those expressing concern over the trend, arguing that too much lending could harm the banking sector as well as the property sector. "Fitch is concerned about an eventual deterioration in banks' asset quality, amid the loan growth acceleration in 2009 ," the ratings agency said. "High investment spending, particularly in the real-estate sector, also carries the risk of asset price misalignments." Banks have been told to increase the amount of capital they hold in order to curb lending, and Chinese city authorities have been told to speed up property developments and build more low- cost housing. The government also this month brought back a sales tax on property sold within five years of its purchase to discourage speculators looking to make quick profits.

UK economy growing

The UK economy grew by 0.3 % in the fourth quarter of 2009 , a leading economic think tank has said. The National Institute of Economic and Social Research (NIESR) predicts that the economy returned to growth, bringing an end to the recession. NIESR's estimates come ahead of the official gross domestic product (GDP) figures for the fourth quarter, which will be released on 26 January. The UK economy has contracted for six consecutive quarters. That means the current recession is the longest since records began in 1955. Broader picture NIESR said the pace of growth appears to be increasing. It estimates that there was a 0.2 % increase in GDP in the three months ending in November. According to NIESR's data, GDP fell by 4.8 % in 2009. "This is a bigger fall than in any year of the Great Depression and is Britain's biggest contraction since 1921. "The broader picture of the depression is that output fell sharply for twelve months until March and has not changed very much since then, although evidence of a recovery is starting to emerge."

More Indian mobile company looks in Bangladeshi market

Buoyed by India's largest mobile phone operator Bharti Airtel's acquisition of 70 percent stake in Warid Telecom, more Indian companies are eyeing the growing Bangladesh market, telecom industry officials here said. What has enthused Indian telecom operators is that the market in Bangladesh, with one of the lowest tele-densities in the world (just 32 percent), has a lot of potential to grow, they said. Arpita Agarwal, associate director (telecom) for PricewaterhouseCoopers, said Airtel could quickly bridge the gap between Warid and Grameenphone, which is the leader in Bangladesh with a market share of over 45 percent. Airtel can achieve a lot considering its experience and the fact that the market dynamics in Bangladesh is similar to India in terms of low market penetration with the pre-paid segment accounting for 98 percent of the market and low average revenue per user, she said. Airtel Chief Executive Officer Manoj Kohli said Bangladesh with just 32 percent mobile phone penetration is among the largest markets globally in terms of growth potential. Telecom analysts say the number of cellphone users in Bangladesh is projected to double to 100 million by the year 2013. Kohli said Airtel brand would be well received in Bangladesh especially since the company's brand ambassadors are Bollywood superstar Shahrukh Khan and music maestro AR Rahman who are very popular in that country. Asked how Bharti Airtel proposed to compete with Grameenphone, Kohli said the business plan and targets would be finalised in the next four to six weeks. He said Airtel plans to introduce new services and innovations in Bangladesh market.