Auto Exhibition Shanghai 2011

The competition among automakers in China has reverted from marketing and sales to an earlier focus -- research and development.

As China is now the world's largest automobile market, more international car manufacturers have decided to build R&D centers here to increase their market share.

In addition to expanding its production capacity at Guangqi Honda and building a second plant at Dongfeng Honda, Japanese automaker Honda Motor Co. Inc. has established a new R&D and product planning center to design models geared towards Chinese buyers.

Takanobu Ito, President and CEO of Honda Motor Co., Ltd., said Monday at the Shanghai Auto Show that the center would "further enrich our lineup of vehicles developed exclusively for China and further enhance customer satisfaction."

Last November, Toyota Motor Corp., the Japanese auto giant, announced the establishment of its sixth global R&D center in China. The company pledged to invest nearly US$700 million to build the center in Changshu city in east China's Jiangsu Province. At first, the facility will serve only the Chinese market, but may be extended in the future to the global market, according to media reports quoting Niu Yu, a public relations official from Toyota China.

Toyota's investment is reported to be the largest one compared with other China-based R&D centers established by multinational auto companies. Previously, Toyota had been criticized for relying heavily on American and Japanese auto markets. Its plan to build the new R&D center in Changshu marks a major shift in its strategy by placing more emphasis on the Chinese market, according to industry analysts.

As more multinational enterprises move their R&D business to China, domestic auto manufacturers are teaming up with them to enhance their own auto design and development capabilities.

China's Jianghuai Automobile Company (JAC) set up China's first overseas R&D center in Turin, Italy, in 2005. Although the facility is located in a European country, JAC is designing Chinese car models there, according to Lu Di from the company's R&D center. At the Shanghai Auto Show, the chief designer said he believed that adding elements and features that appealed to Chinese car buyers into auto design and development would give domestic automakers certain advantages over foreign ones.

The R&D business boom in China has attracted many car design firms, including Italian company PininFarina, which is participating in the Shanghai Auto Show for the first time, displaying two top sports cars, the Ferrari Four (FF) and Maserati GT. PininFarina works with several high-end automakers, including Ferrari, Maserati and Rolls-Royce.