Should car's price in China much Higher than US - Essay Example

It is clear that Chinese government policy has led to the skyrocketing prices of cars in China prompting unauthorized trade by small-time American entrepreneurs who export cars for profit. The Beijing car policy was intended to assist the Chinese auto-making industry make large profits but the move seems to benefit other world’s car makers such as General Motors and BMW. This practice is however against the standard industry practice as argued by Tesla who have since thrived in China with their electric cars.

Regardless of the higher auto sales and output in China, the policies instituted in the industry shows that for the same car, the cost is higher in China than in U.S. there are also positive record of the number of cars that can be sold in China and US. It is reported that a high number of units of cars are sold in China compared to US despite the higher prices associated with cars in China. This is a sign of ready market in China that act as a green light to many international companies in the car industry to enter the market.

Interestingly, the record number of purchase in China is not influenced by prices because car prices are averagely high. US companies tend to engage more in promotional campaigns to promote sales of their products, something that do not bother sellers in China because the market is ever ready. Recently, the Chinese government has warned companies selling their products including cars more expensively than any other market but the auto makers argue that they are entitled to set their prices differently in different markets.

The companies argue that the additional cost is to make sure that the cars are sold with proper equipment and warranties for their final destination. However, the price differences between U.S and China has seen unscrupulous business people making huge profits by exporting cars