The nation's 2006 vehicle exports are forecast to reach 250,000 units, up from 160,000 units last year.

Vice-Minister of Commerce Wei Jianguo predicted last week that China's annual vehicle and spare part exports would grow to US$120 billion within the next decade from US$20 billion in 2005.

However, Michael Dunne, president of industry consultancy Automotive Resources Asia Ltd, said Chinese automakers face many obstacles as they venture out into the global marketplace, such as problems related to quality and overseas marketing and distribution, and the absence of industry consolidation.

"World-class quality, industry consolidation and marketing acumen do not occur overnight," Dunne said.

"It would be smart for Chinese companies to export to developing countries in the short-term and enter the United States and Europe only when they are really prepared to do battle with the best."

A top executive of Shanghai Automotive Industry Corp, China's biggest carmaker, said last week it has postponed plans to export its own-brand sedans based on Rover technology to Europe and the United States in an effort to focus on the domestic market.

The firm, a partner of both Volkswagen and General Motors, announced in April that it planned to sell its own-brand sedans in Western markets early next year.

Fellow Chinese carmaker Chery Automobile's plans to export cars to the United States next year have also been delayed after its US partner Visionary Vehicle LLC said last week that the two parties had halted negotiations to set up a joint venture to design, produce and sell cars.

With more than 100 vehicle producers and thousands of spare part companies, China's auto sector remains highly fragmented.

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