Govt ponders raising cap on foreign stakes in auto JV

The Great Wall car at an auto show in Thailand. [Gao Jianjun / Xinhua]

At the meeting, executives from the four major State-owned automakers - FAW, Dongfeng, Chang'an and GAC - expressed their objection to the change.

"The limitation should not be eased at the moment, definitely. The measure is still effective to date to help local manufacturers grow both bigger and stronger. The automotive industry is our economic pillar, different from other ordinary manufacturing industries," said Wu Shaoming, deputy general-manager of the FAW Group.

"Self-developed technologies are crucial to the nation's automotive industry. We should not rely too much on foreign companies to support our national industry. We should learn from the lessons of Brazil and Russia," said Liao Zhenbo, director at the strategy plan department of Dongfeng Motor Corp.

Dong Yang, deputy director and secretary-general of the China Association of Automobile Manufacturers, also said that the stock proportion should not be loosened at the time. He proposed that domestic automakers should double their R&D investment to catch up with the levels of companies in developed countries.

Executives from GAC and Chang'an said domestic automotive industry has not got fully prepared for stock proportion ease.

Different opinions

However, delegates from some privately owned automakers have different opinions.

Zhejiang Geely Holding Group Chairman Li Shufu said the current stock limitation only helps State-owned companies monopolize the market with "too many joint venture products".

"Opposing the loosening of the stock proportion is actually a selfish attitude in the name of supporting national industry. Vehicles from joint ventures are sold at higher prices than in Europe, US and Japan, " Li said.

He said the existing share structure ensures that State-owned enterprises can secure handsome profits from joint venture products, therefore they are reluctant to invest in self-developed products and brands.

For private automakers like Geely - which were far weaker than the giant SOEs in their early stage - a 50 percent stock ceiling only left them in the unfavorable position to win foreign partners. So they have to devote more energy in developing their own brands and products without help from foreign manufacturers.

"Growing from difficulties and fierce competition, we are readier for a more open and fairer market than others," Li said.

He said the stock proportion policy should not just protect the interests of several automakers.

"It will harm the entire nation's competitiveness in the long term."