Auto industry in China: foreign countries should be able to invest more

Status: December 28, 2021 3:15 p.m.

China wants to enable foreign corporations to invest more in their own auto industry from next year. The first German carmakers have already expressed their interest.

By Eva Lamby-Schmitt, ARD-Studio Shanghai

The new regulation for the Chinese automotive market does not come as a surprise. In April 2018, China announced that it would open the automotive industry to foreigners in several steps. So far, China has forced foreign car companies to work with Chinese companies in so-called joint ventures.

China’s car market is the world’s largest and also a major sales market for German corporations. The Chinese auto analyst Zhong Shi sees advantages for foreign companies with the change:

Once the change goes into effect, overseas auto companies will be able to hold more stakes and become majority shareholders in joint ventures in the auto industry in China. Foreign auto companies will receive more benefits such as voting rights and profit shares in the joint ventures.

Zhong Shi therefore assumes that foreign car manufacturers will have more incentives to invest in the Chinese auto industry in the future.

Regulation should apply from next year

According to the responsible authorities in China, the new regulation will apply from 2022.

Maximilian Butek from the German Chamber of Commerce in Shanghai welcomes the opening of the Chinese automotive industry to foreign companies. After the announcement three years ago, German carmakers had already adjusted to this. “However, I do not expect that there will necessarily be redistributions in existing joint ventures. I also do not expect that many foreign automakers will now enter the market 100 percent on their own,” says Butek.

German automobile manufacturers still need strong Chinese partners who are well networked on the local market.

German automakers want to invest more

The German automaker BMW recently announced that it would expand its presence in China and produce even more models in the country. In the first quarter of next year, BMW plans to increase its stake in the joint venture with its Chinese partner by 25 percent. The Munich-based automaker would then control 75 percent of the joint venture and would be the first Western automaker with this privilege.

Daimler and Volkswagen have also expressed the wish to take over the majority of their Chinese joint ventures, but so far without success.

China removes investment barriers for foreign automakers

Eva Lamby-Schmitt, ARD Shanghai, 28.12.2021 · 14:41

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