Hybrid challenge for auto JV in China

Hinrichs predicts that China will account for 70 percent of Ford's growth for the next 10 years, and he expects more than 30 percent of sales volume to come from the Asia-Pacific region.

Dong Yang, vice-chairman of the China Association of Automobile Manufacturers, insists that Chinese brands should have the say in the domestic market during future consolidation.

"Multinationals should deepen their cooperation with Chinese partners, rather than complaining to the government for more share of the joint-venture."

Based on Chinese regulations, foreign automakers have to form joint ventures with Chinese companies, and the stake cannot exceed 50 percent. For decades, foreign brands have been complaining about this aspect.

"Chinese brands are still weak compared with auto giants from Europe, the US, and Japan. If the government allows the multinationals to increase their stake in the JV, Chinese brands will become even more vulnerable," Dong says.

Ma from Chang'an says the biggest opportunity, and challenge as well, is whether Chinese companies can learn some "real technologies" from foreign partners to accelerate their own development, rather than "getting an outdated platform to deceive the customers".

China Grand Auto, the biggest auto dealership in China in terms of revenue, says it is willing to cooperate with the new joint-venture brands, as long as the models have market demand.

"If the cost is reasonable and the returns decent, we will consider cooperating with these brands," a manager from the company says.

The manager suggested that distribution networks of these new brands should be different from foreign brands, which usually invest millions to build huge flagship stores.

"Generally these brands are budget models targeting the lower-tier cities, and the profit margin is much lower, so they should not follow their foreign counterparts in distribution."

Song says the Chinese partner should figure out which specific technology or skill they want to learn from foreign partners.

wangchao@chinadaily.com.cn

 

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