When China later published its state automotive plan, under which only a few foreign ventures are allowed, the Shanghai luxury-sedan project was the plum. Fearing that it was the last chance to get into China, big car makers scuffled for the deal. It hired Chinese consultants and used its own team of Chinese nationals to bridge cultural gaps. It was the highest bidder in the technology-transfer game. And competition from imports will increase as China lowers duties in its effort to join the World Trade Organization.
Many imports evade duties in any case.
Smuggled cars in southern China's Guangdong Province helped kill the market for the Peugeots once assembled there. Peugeot-Citroen pulled out of that venture last year after losing money for a decade. To help VW build volume and reach economies of scale, Shanghai directed the city's agencies and taxi fleets to buy the boxy VW Santanas. Every morning, people lined up outside the factory with bundles of cash. Those days are gone.