Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Chrysler CEO Marchionne: Jeep Factories In China Are Just The "First Step In The Globalization Of Jeep"
An article in today's Detroit News (Chrysler to build Jeeps in China) has to be translated in order to be understood. It begins:
TRANSLATION: Due to China's 25% base tariff on American produced automobiles, plus the additional 15% added in December 2011, Fiat can't afford to export Jeeps to China. Since Russia is copying China's strategy, Fiat will also build Jeeps there.
TRANSLATION: Fiat is engaged in the "globalization of Jeep." During the first stages its overseas production will be for local markets.
TRANSLATION: Fiat realizes that its Chinese partner will steal its Jeep technologies when it produces Jeeps in China. That's why it won't be producing its top-of-the-line Wranglers and Grand Cherokees there.
SUMMARY: China keeps out American products; America lets in China's products. China gets 7-10% growth; America gets 1-2% growth. Fiat is doing the best it can, given this playing field.
Journal of Economic Literature:
Atlantic Economic Journal: