Chinese Government Urged To Buy Chinese. At Least A Bit More

Bertel Schmitt
by Bertel Schmitt

If you are stuck in Beijing traffic, while police closes the center lane to give preferential treatment to a government motorcade, you will notice a penchant for foreign brands amongst Chinese government officials: White license plates (= government) are usually found on bigger bore Audis, BMWs, and Mercedeses (or “Benz” as they are called in China.) After all, they are made in China in joint ventures, and only petty people will point out that an Audi A8, a Volkswagen Touareg, or a Benz S Class are imports.

The tastes are about to change, albeit not too drastically.

Chinese authorities are publicly thinking about new regulations to increase the ratio of domestic brand cars to more than 50 percent in government procurement of official cars, reports Xinhua. The government is the biggest customer of cars in China, with an annual budget of around $15b. The total value of official-car purchase is 8 percent of the total value of car sales in China.

Not only are government officials being asked to buy Chinese. They are also urged not to splurge.

Under the proposed regulation, ordinary vehicles of all government departments nationwide should have an engine displacement of up to 1.8 liters and cost less than $23,500.

Ministers and provincial heads should make do with an engine displacement of up to 3.0 liters and a price below $66,000.

Domestic car manufactures welcomed the new regulations, saying they will be given a boost by the change. We’ll keep an eye on Beijing’s center lanes to monitor whether the new regulations will make a difference. Others are watching as well. So far, China’s Procurement Center of the Central People’s Government (PCCG) has deemed 721 vehicles as excessive or extravagant. A drop in the bucket, we’d say.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Tosh Tosh on Dec 31, 2009

    I'm too lazy to look it up myself: Where is China on pollution control? Isn't their dirty car exhaust their biggest health threat?

    • Psmisc Psmisc on Dec 31, 2009

      Cars are actually a small contributor. It's mostly coal plants, construction sites, and two-stroke engine scooters. Also China doesn't have expensive clean diesel, so as to keep food prices low (that's why they're a big pusher of hybrid and electric drivetrains). They are also currently building subways and nuclear plants like mad.

  • Bertel Schmitt Bertel Schmitt on Jan 01, 2010

    drivebywire: Interesting point. Whether Volvo will count as a "domestic brand" remains to be seen. Volvo will be owned by the Hong Kong holding company of Geely. Technically, Hong Kong is regarded as "overseas" - Chinese nationals need a visa to get into HK, and a lot of the "foreign investment" into China flows via Hong Kong. If Volvo counts as "domestic," then a privately owned car company (Geely) could sell cars unencumbered to the government, whereas government-owned companies engaged in joint ventures (such as SAIC, FAW, Brilliance, BAIC) would be restricted by the new regulations. We'll see how that works out.

    Tosh: Big cities such as Beijing and Shanghai have enacted tough regimens. Can't enter with anything less than Euro 4, which is quite good. Stinkers are being euthanized en masse. The air quality drastically improved last year. As mentioned by psmisc, cars are now a small contributor.

  • Ronin The very asking of the question "Are Plug-In Hybrids the Future?" is an interesting one. Because just 2 or 3 years ago we'd be asking- no, asserting- that E cars are the future. We're no longer asking that question.
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  • Tassos Jong-iL Electric vehicles are mandated by 2020 in One Korea. We are ahead of the time.