By on February 21, 2014

China’s Ministry of Industry and Information Technology, in line with President Xi Jinping’s desire for opening the domestic economy to private and foreign investors, plans to relax restrictions on foreign ownership of joint ventures with local automakers in the face of those warning such a move would be the beginning of the end of the Chinese local auto industry.

Automotive News China reports the organization will join their fellow ministries in developing a plan to implement the proposed deregulation sometime in the future. Currently, foreign companies are mandated to form joint ventures with local companies in order to do business in China, while foreign shareholders are barred from owning more than half of said ventures.

Meanwhile, the China Association of Automobile Manufacturers, representing local interests, voiced their opposition in a statement following the announcement by ministry spokesman Xiao Chunquan:

Relaxing the current foreign ownership restrictions will wipe out Chinese brands. Foreign companies can totally use the competitive advantage of their global supply chains to support a price strategy to kill Chinese brands in the cradle.

The death spiral may have already begun, however, as Chinese consumers opt for foreign makes such as Buick, Volkswagen and Peugeot. Local brands lost 4.9 percent market share in 2013 from the year before, hovering around 38.4 percent as Volkswagen AG became the No. 1 foreign automaker over General Motors during a prosperous run by all foreign manufacturers bolstered by higher industry sales.

Get the latest TTAC e-Newsletter!

Recommended

15 Comments on “China To Relax Restrictions On Foreign Joint Venture Ownerships...”



Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • SCE to AUX: Good point. Who produces a 115th anniversary edition of anything?
  • SCE to AUX: It’s because California is filled with Republicans and their SUVs. Here in Pennsylvania (where we...
  • bikegoesbaa: “it seems to take far-reaching war and hardship to create a Greatest Generation and we haven’t...
  • Jacob: Don’t forget that Acuras have always been all mostly based on Honda’s platforms. Honda first...
  • scrubnick: When a CNG tank is punctured, the gas escapes quite quickly and dissipates. When a gasoline tank is...

New Car Research

Get a Free Dealer Quote

Staff