Automotive Lobbyists in China Opposing Rule Change in Foreign Ownership

TTAC Staff
by TTAC Staff

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.

TTAC Staff
TTAC Staff

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  • Readallover Readallover on Dec 06, 2013

    Or, this might be the government finally doing something about bad loans to some banks. Like Japan in the 80`s, China has protected bad banks in the hopes the loans will turn around, no matter how hopeless. Sooner or later some banks will have to go bankrupt. And some of those bad loans were made to Chinese automakers and suppliers. Letting foreigners buy these companies would help pay off the loans and bail out the banks.

  • DrivenToMadness DrivenToMadness on Dec 06, 2013

    Whatever the political motivations are, if the end result is that the crony and sub-par suppliers are consolidated as a result, that should be good for everyone: consumers and competitors.

  • Onus Onus on Dec 06, 2013

    This should kick the local manufactures in the butt to get there S*** together and make good cars while they still have money coming in.

  • Threeer Threeer on Dec 07, 2013

    If by "learn a few things" you mean outright theft of know-how, then sure... I'd much prefer a Mustang (or Verano, or whatever vehicle) made in the USA be sold in any country, especially China. For too long, foreign companies have been hog-tied and bullied into forming less than equal "partnerships" with the Chinese. While this model has worked for the last 30 years, I'm not sure it is sustainable over the next 30 as income parity (relatively speaking) starts to drive manufacturing out of China (and hopefully to a decently noticeable degree, back to the US). We'll see if the Chinese are serious about opening up their manufacturing to foreign companies without the draconian restrictions and regulations they place on them... but I am not holding my breath.

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