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China may lift cap on foreign carmaker stakes in JVs

2K views 22 replies 14 participants last post by  chinamonty 
#1 · (Edited)
China may lift cap on foreign carmaker stakes in JVs
June 27, 2016
Tian Ying
Bloomberg via AutoNews.com

BEIJING -- China's government is considering the removal of caps on stakes foreign carmakers can own in joint ventures with local partners, potentially loosening a policy criticized for shielding state-owned companies from competition and building their own brands.

Xu Shaoshi, chairman of the National Development and Reform Commission, said the government is looking into lifting the 50 percent cap in an interview at a World Economic Forum event in Tianjin. China has mandated that foreign players enter joint ventures with domestic partners to operate in the country since 1994.

Backers of allowing foreign carmakers to control their operations in the world's largest auto market include Li Shufu, the billionaire chairman of Volvo Cars parent Zhejiang Geely Holding Group, who's said it would encourage competition and be in the interests of consumers.

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#2 · (Edited)
If this were to come to fruition, it could be huge for Western companies. GM makes big money in China and has a sprawling operation there. No doubt they could take their stake in any joint venture (or any local partner, for that matter) above the 50% mark to "claim" those sales as their own. However, I'm sure looking at taking a chunk out of SAIC alone would/could be on the table now (even if it is unlikely to win regulatory approval in Beijing).
 
#9 ·
Per the above two comments, it really escapes me on how China can get away with this. However, though I don't trust the Chinese government this is a good thing. And when I say I don't trust their government I wouldn't put it past them to nationalize all of the foreign makes if they start making to much $$.
 
#16 ·
My my my said the spider to the fly.

Per the above two comments, it really escapes me on how China can get away with this. However, though I don't trust the Chinese government this is a good thing. And when I say I don't trust their government I wouldn't put it past them to nationalize all of the foreign makes if they start making too much $$.
Koober. It's worked so very well.
 
#14 ·
While some of you continue to swim in the pooooooor oppressed America end of the paranoia pool, keep in mind that the Chinese partners in many of those JV's are footing half the bill, and in some cases, more, for product development, tooling and manufacturing. There'd be no Buick at all and probably no Cadillac without China and specifically, Shanghai Auto.

You don't hear the carmakers complaining...
 
#18 ·
1) Labels are for cans, not people. But if you insist, I think it's racist to assume the western world triumphs regardless of how the game is played. I don't assume any one group of people are incapable of success in a free market unless granted a handicap. Prejudicial labels are only attempts to shut down legitimate debate.

2) When investment dollars are procured in a currency that is continuously devalued against your western JV partner, does it really matter that they foot some portion of the bill? If we go to dinner, can I split the check with you and then pay my half in Pesos?

3) GM/Ford/FCA have all gone on record opposing TPP, so it would seem they have some opinion in regarding unfair trade practices. Corporations generally don't speak in very loud voices when it comes to foreign affairs. I'm not sure that means they prefer the status quo. In fact, it's asinine to assume they do because opening these JVs and manufacturing is a duplication of capital and labor, especially at lower volumes.
 
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