Ex-minister compares China’s auto JV policy to opium

Article by Christian Andrei, on September 5, 2012

A former Chinese minister referred to its government’s policy of requiring all foreign car makers to form local joint ventures to be similar to “opium" since it fails to promote first-rate indigenous automakers. In 2009, China beat the U.S. to become the largest auto market in the world by volume. However, all the state-owned auto groups depend greatly on their foreign partners.

He Guangyuan, a former machinery and industry minister, told Yahoo that once automakers have experienced it, they will forever be addicted to it, making it a lot like opium. He was interviewed when he attended an industry forum in Tianjin in the past weekend.

Of course, he isn’t anymore capable of influencing policy but it’s highly unusual for current and even former senior government officials to say anything negative about an existing policy, says Reuters. About 30 years ago, China had made it official that it will welcome foreign automakers.

Each player was required to team up with no more than two local partners and hold up to a 50% stake in the joint venture. All of the major automakers in the world currently operate joint ventures in China.

He said that “everyone” in the country has been working to reel in some foreign investment. However, many years have passed and the company doesn’t even have a brand that could compete in the auto world.

Topics: china, joint venture

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