Honda's new plant in Guangzhou begins exporting the "Fit" compact car to Europe this month. The "Fit" as a tiny 4-door, hatchback sedan perfect for urban lifestyles and tiny streets.

The Guangzhou plant currently produces export-only products. It is expected that the plant's capacity is around 50,000 vehicles annually. That is a drop in the bucket in terms of gross sales potential, and Honda hasn't ruled out selling "Fits" in the North American market. Honda now sells some 200,000 locally-built cars in China, and that is a rapidly growing market. Certainly lots of China-built models will soon come to the US. Import promoter Malcolm Bricklin is set to announce US dealers for the Chery QQ import.

Honda is clearly positioning itself to be the major player selling Chinese-built vehicles in US. But despite cheap labor costs, making cars in China is relatively expense. All the infrastructure has to be developed, and automakers still have to meet US quality, safety and emissions standards. And there will be lots of competition and China is urging its own domestic automakers to export cars overseas.

It is likely that the US market, and many others will be flooded with automotive products from China. Though we don't know what the quality will be, it is likely to be competitive ultimately forcing down vehicle prices in the US. That's great for consumers but could be deadly for other automakers selling in the US market.