China: lobbyists oppose rule change on foreign ownership image

China’s auto lobby has fiercely opposed a possible move by Beijing to ease restrictions on foreign ownership in the car industry, saying that the move would seriously weaken the position of indigenous carmakers.

Dong Yang, secretary general of the China Association of Automobile Manufacturers (CAAM), said that if foreign ownership rules were relaxed, Chinese carmakers would lose control of joint ventures they now own and run jointly with global automakers.

“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 website. “From another perspective, current restrictions have not dampened global carmakers’ enthusiasm whatsoever to invest in China, so why should we be more open?”

CAAM’s opposition comes in the wake of indications by several Chinese policymakers that they are considering relaxing foreign investment rules in China’s automobile industry.

CAAM is one of China’s biggest industry associations representing the automotive industry. Its nearly 2,000 members include China’s massive state-owned automakers such as SAIC Motor, FAW Group and Dongfeng Motor Group.

China has required global automakers including GM, Ford, VW and Toyota 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.

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 auto manufacturing.

In addition to the 50-percent 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 their local partners.

Via Reuters