The automotive industry lobby group China Association of Automobile Manufacturers is at loggerheads with Beijing over a rule change proposal that would ease restrictions on foreign ownership of auto manufacturing ventures. The fear, according to CAAM Secretary General Dong Yang, is that should the restraining bolt be removed, the local industry would lose control of the joint ventures they currently hold, if not the Chinese auto industry itself.
China’s Ministry of Commerce announced that they are considering relaxing foreign investment rules in the country’s automotive sector. Currently, foreign manufacturers must form a joint partnership with local automakers in order to build their cars for the Chinese market, all in the hope that the locals learn a thing or two about technology and management expertise so that they may, in turn, be competitive on a global scale. On top of this, foreign automakers are only allowed to own up to half of said joint partnerships, a framework that is not mandated for doing business in other countries.
While the ministry sees the current setup as imbalanced, Dong views relaxing the rules would be the difference between life and death, urging Beijing to carefully and deliberately reconsider. Alas, the point may be moot: only 30 percent of Chinese consumers choose the home team when it comes to car ownership.