Thursday, July 26, 2007

Cheap and deadly

According to World Bank estimates, there are 600 deaths in auto accidents per day and another 45,000 injured. That works out to 219 thousand traffic fatalities per year and a whopping 16.4 million injuries! Although those numbers sound so high as to be slightly questionable, I've spent enough hours in Beijing traffic to believe that they can't be too far off. According to China Economic Review, the cause is due to the fact that few drivers follow traffic rules (what rules?) but also due to the poor safety standards of Chinese made cars. Chery and Geely were cited as getting about the lowest scores possible for several models based on US and European standards. The cost of improving safety standards is estimated to be about $2,000 per car - pretty steep compared to the average car price in China of $6,500. But maybe this is one consumer good where the Chinese will pay up for quality. Or natural selection may change consumer buying preferences.

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