Compete with the world or die, China keeps promise to remove protection for local car brands
Jerrica · Dec 30, 2021 02:59 PM
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China has announced that it will abolish limits on foreign ownership in the domestic auto industry. This will mean that foreign passenger car manufacturers will be able to have full ownership of manufacturing operations of their brands beginning 1-January-2022.
The announcement came in a release of the Special Management Measures for Foreign Investment Access list from the Ministry of Commerce and the National Development and Reform Commission, China’s top economic planning agency.
The industry is so big that local manufacturers were able to establish China-only models like the Zhi Pao which is originally based on the Kia Sportage. Photo credit: Autohome
Other than that, it will also lift the limit that foreign investors can only establish a maximum of two joint ventures (JV) in the country.
China first hinted that it will be relaxing the laws to limit foreign ownership for the automotive industry in the country when it released the same list in 2020 for the year 2021.
Honda Integra sold by GAC Honda, one of two JVs Honda has in China
As promised, passenger car manufacturing has been removed from the list that limits foreign investments in the business. However, there are still a few guidelines that foreign investors will have to follow, such as 67 percent of the ownership has to be held by a local representative.
Since 1994, foreign automotive brands were required to establish joint ventures (JV) within China to be able to conduct business in the country. Hence, the establishment of various JVs like Dongfeng Honda and GAC-Honda as well as FAW Toyota and GAC Toyota just to name a few.
With passenger car manufacturing removed from the list, brands like Honda, Toyota, Volkswagen, and more will be allowed to takeover their JVs in China. Meanwhile, it will also allow foreign brands like Rivian and Lucid to enter the country without needing to buy in to a China brand.
There isnât a time in memory that doesnât involve staring at cars. After discovering the excitement of watching Schumacher vs Hakkinen, Formula 1 became a major part of life. The love for cars and F1 ultimately led to a job with CAR Magazine. The untimely death of the magazine meant a hiatus from cars at lifestyle womenâs magazine Marie Claire before another opportunity came knocking again.
