Government Considers About Removing Auto Joint Venture Share Percentage

“With more and more companies do business overseas, (joint venture) share percentage remove been brought into desk.” Lin CHEN, Commercial Counselor of Ministry of Commerce Foreign Investment and Economic Cooperation Department, has surprised people during interview at the Fourth Global Auto Forum in Wuhan on 17 Oct.

Lin CHEN points out that the policy will not implement shortly, but it is very possible for Chinese government remove its percentage. Lin CHEN was surrounding by questions from media after the announcement.

In auto industry manufacture area, foreign investment shall not over 50%. It is the bottle line for joint venture in China. However, about the limitation cancel possibility has been augured recently.

Some experts believe that it is a protection for domestic company innovation in some degree although it does not directly connect with real management power.

However, capital cooperation has evolved time by time. In Feb this year, German Daimler AG has brought 12% shares of Beijing Auto Co. Ltd. it seems German Daimler AG breaks the 50% limitation is China. Because German Daimler AG holds Beijing Benz Auto Co. Ltd. 49% shares. Besides, Beijing Auto has decided to invest into German Daimler AG, which makes hard to tell whether or not foreign capital shareholding exceed 50%.

“It is good news for private companies, but negative for stated-owned companies.” Miao XUE, vice president and general manager of GAC Gio auto. He believes that if the limitation broken, more and more overseas talented people will join domestic auto companies. Private company has flexible system to take those people, but stated-owned companies are decided by government.

Shufu LI, president of Geely and Volvo, is a staunchest supporter. Because of Volvo original from Sweden, so it comes into China with foreign company label, which means it has been exclude from financial subsidy.