por admin » Mar Abr 17, 2018 7:00 am
China to Ease Rules on Foreign Auto Makers
Beijing hands U.S. an important concession
Trefor Moss
Updated April 17, 2018 7:50 a.m. ET
Employees work on the Honda Civic production line at the automaker's Dongfeng Honda factory in Wuhan, China.
Employees work on the Honda Civic production line at the automaker's Dongfeng Honda factory in Wuhan, China. Photo: str/Agence France-Presse/Getty Images
By
Trefor Moss
SHANGHAI—China said Tuesday it will phase out rules requiring foreign auto makers to share their factory ownership and profits with Chinese companies by 2022, answering U.S. calls for a level playing field in the world’s biggest auto market.
China now forces foreign auto makers to set up 50-50 joint ventures with Chinese partners if they want to locally produce cars to avoid 25% tariffs. The government said these rules will be eliminated this year for companies building electric vehicles—a move that could benefit Tesla Inc. —and for all vehicles by 2022.
“This will completely change the situation in China within 10 years,” said Yale Zhang, managing director of Shanghai-based consultancy Automotive Foresight.
The action could bolster President Donald Trump’s assertions that his policy of pressurizing China to modify its trade behavior is yielding swift results. Even so, people in the industry said the reshaping of China’s auto sector wouldn’t necessarily hand an advantage to foreign players, as the implications of the reforms would take years to become clear.
“We have no plan to change our investment ratio,” said Keitaro Nakamura, a China-based spokesman for Honda Motor Co. , which operates joint ventures with local auto makers Guangzhou Auto and Dongfeng Motor Co. “If we had this option 20 years ago when we were first coming into the market, we might have thought differently. But we’ve been working with them for two decades.”
A China-based executive at a foreign auto maker said, “I think the trade threat hastened it and forced the top to make a tough call after so many years of bureaucratic bickering and pushback by vested interest(s).”
Michael Laske, China president of Austrian powertrain supplier AVL GmbH, called the action a “positive step forward for global trade” but added that the big winner would likely be China itself. Lifting limits on electric-car makers by the end of this year would encourage foreign investments from Tesla and others, helping China to strengthen its EV supply chain and become the world’s factory for EVs, he said.
While handing the U.S. an important concession, China wouldn’t have lifted investment restrictions unless “they felt they were ready to compete,” he said.
Tesla has been struggling to complete a deal to open a plant in China, but the rules announced Tuesday appear to clear the way for the electric-car maker to open a wholly owned company here.
Tesla didn’t immediately respond to questions.
Rules that forced auto makers such as General Motors Co. and Ford Motor Co. to set up joint ventures were criticized by U.S. Trade Representative Robert Lighthizer’s investigation into Chinese trade practices last month, which triggered tit-for-tat punitive measures between the world’s two largest economies.
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The U.S. investigation contended that China’s investment restrictions were a means of forcing foreign auto makers to transfer technology to local partners.
Last week, President Xi Jinping, addressing the Boao Forum in southern China, said those restrictions would be removed, in an apparent attempt to defuse trade tensions.
Foreign-investment limits on companies building new energy vehicles—a term covering electric cars powered by batteries or fuel cells—will be removed this year. Limits on those building commercial vehicles and passenger cars will be lifted in 2020 and 2022, respectively.
Mr. Zhang, the industry analyst, predicted that most of China’s car-making joint ventures would be gone by 2030, enabling foreign auto makers to retain all their China profits, and forcing domestic auto makers to stand on their own.
“They have four years to arrange the divorce,” Mr. Zhang said.
However, foreign auto makers could find it difficult to extricate themselves from joint ventures that have existed in some cases for more than two decades; reaching an agreement on valuation is likely to be one obstacle. And even if a price could be agreed upon, foreign auto makers might not be able to afford to buy out their Chinese partners, said Janet Lewis, Macquarie Capital Research’s managing director of equity research.
For some auto makers, staying together could prove easier.
“GM’s growth in China is a result of working with our trusted joint venture partners,” said a spokeswoman for GM, which builds cars in China with state-run Shanghai Auto. “We will continue to work with our partners to provide high-quality products and services to consumers.”
Ford didn’t immediately respond to a request for comment.
—Yoko Kubota, Liyan Qi and Lin Zhu in Beijing contributed to this