A suggestion by the Chinese central government to ease restrictions on foreign automaker ownership is meeting fierce resistance because automakers say any such move would weaken the position of domestic companies.
According to Automotive News China, Dong Yang, secretary general of the China Association of Automobile Manufacturers, said that if foreign ownership rules were relaxed, Chinese carmakers would lose control of joint ventures they now own and run together with global automakers.
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“Foreign ownership being capped at 50% is the red line we must not cross because we need to protect our Chinese brands,” Dong said in a statement posted on the CAAM Web site. “From another perspective, current restrictions have not dampened global carmakers’ enthusiasm whatsoever to invest in China, so why should we be more open?”
So far, China has required global automakers to form joint ventures in order to produce cars in the country, hoping that Chinese carmakers can absorb foreign technology and management expertise to become more competitive.
Such JVs can include separate distribution and marketing companies. There are also rules governing the number of JVs foreign companies can participate in.
The Ministry of Commerce told a media briefing in Beijing last month that the government would likely relax foreign investment restrictions soon in areas including vehicle manufacturing.
In addition to the 50% ownership cap, the current policy calls for foreign automakers to set up a jointly run technical centre in China and to transfer certain technology to local partners.
