Foreign automakers must build low-cost local brands if they want access to Chinese market
23 Mars 2011
If you want to do business in the Chinese market, you have to play by the rules set out by the Chinese government... and those rules are subject to change.
Such is the case in the automotive segment, where officials from China are reportedly set to add some requirements for automakers that wish to update any contracts in an effort to build more vehicles in China.
Apparently, as much as 30% of any additional production capacity over what has already been agreed upon will be earmarked for the Chinese market, and that percentage of vehicles would have to be sold under a new Chinese brand name at a "low cost."
It's not necessarily more brands China wants, it's intellectual property. "During 10 years of trying, China has become a big factory for foreign companies, and their Chinese partners didn't get advanced technology. Through this industrial policy they would like Chinese carmakers to get IP in order to own this market," said Lang Xuehong, automotive analyst with Sinotrust, quoted by Financial Times.
Will the scales fall in favor of more access to the lucrative Chinese market or will the desire to keep valuable intellectual property under the roof of the company that actually earned it through actual research and development triumph? We'll see.