Volvo chairman says China should not hinder competition

Article by Christian Andrei, on August 20, 2014

The chairman of Volvo and parent Geely Automobile Holdings Ltd. -- Li Shufu -- believes that China should stop trying to block competition in its territory. He told Bloomberg that it would be best if China is completely an open market, like the United States and Europe. He also said if China becomes completely open, it would be fair to everyone since it would allow the role of the market, possibly enabling companies to develop better.

Li had called on the Chinese government to allow foreign carmakers more control over their operations in the country so as to hasten competition and bring down prices.

The China Automotive Technology and Research Center disclosed in June that it is proposing two to three electric-vehicle manufacturing licenses for companies other than carmakers. Li has also called for easing regulations in the conventional vehicle market.

China requires foreign carmakers to partner with local companies. It also enforces rules that restrict the carmakers’ decision making. Geely has seen its sales drop 29 percent in the first half of 2014 to 187,186 units. It is aiming to boost sales by cutting the number of brands it sells.

The government has said that the auto industry laden with around 110 brands should consolidate. It has also threatened to cancel the permits of carmakers who failed to comply with the minimum production levels by October 2015 -- 1,000 passenger vehicles or 50 medium to heavy trucks, depending on their category.

Industry minister Miao Wei said in March that local carmakers are still not competitive enough and are not yet capable for overseas expansion. He remarked that China isn't working on plans to lift the 50 percent limit on foreign ownership of carmakers.

Li told Bloomberg in an interview in July that he welcomes entrepreneurs from information technology and other industries to enter the auto industry.

He remarked that while China shouldn't impose thresholds. It should have standards and should use the law. He noted that whether the threshold is scientific or fair is important. [source: automotive news europe - sub. required]

Topics: volvo, china

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