China Lift Its Ownership On Foreign Automakers; VW, Mercedes And Co. Can Now Take Over Joint Ventures

China lift its ownership on foreign automakers; Volkswagen (VW), Mercedes and Co. can now take over joint ventures.

Before, foreign automakers has to form 50:50 joint venture with local companies in order to enter the lucrative Chinese car market.

But in 2018, China change the rules, allowing foreign companies to increase their stakes to up to 70 percent.

The Joint-venture schemes in China were designed to leave both profits and technology in the country.

The move was aimed to allow for domestic brands to grow and prosper — and the move seems to have worked.

China has lifted foreign ownership restrictions from its automotive industry, and according to a document released by the Chinese Ministry of Commerce and the National Development and Reform Commission, the move will become effective from January 1, 2022.

Since 1994, China has mandated foreign automakers, including Mercedes-Benz and Volkswagen, to form 50:50 joint ventures with local car makers in order to enter the lucrative Chinese car market. But in 2018, China change the rules, allowing foreign companies to increase their stakes to up to 70 percent.

Joint-venture schemes in China, the world’s largest auto market, were designed to leave both profits and technology in the country. It was aimed to allow for domestic brands to grow and prosper — and the move seems to have worked.

The five biggest automakers, measured by automobile unit production, are all Chinese, with SAIC, FAW, BAIC, Dongfeng and Shangan all state owned and all involved with joint-ventures with foreign brands.

China’s latest move will allow newer brands like Rivian and Lucid to gain access to the world’s biggest passenger car market without buying in to a Chinese brand. It will also allows early-adopting foreign brands like Volkswagen, Ford, GM and Mercedes-Benz to take over their joint ventures.

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Joint ventures from the Shanghai-based SAIC builds and sells Volkswagens, Ivecos, Skodas, Buicks and Chevrolet. But SAIC also has its own brands like Maxus, Roewe, Yuejin and the once-British MG brand.

Wuhan-based Dongfeng has Joint Ventures with Cummins, Dana, Honda, Nissan, Renault, Kia and Stellantis. Dongfeng rescued France’s PSA Groupe a decade ago and maintains a significant holding in Stellantis.

FAW builds almost a dozen different brands, including Volkswagen, Mazda, Toyota, Audi and GM, along with owning domestic brands like Hongqi, Jilin, Jiaxing, Haima, among others.

BAIC has joint ventures with Daimler’s Mercedes-Benz and South Korean automaker, Hyundai. Ford went with Chang’an for its Changan Ford joint venture, as did Suzuki, Mazda (Changan Mazda) and Stellantis.

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