The European Commission is threathening legal action against China for discrimination against European car companies, with their latest decision to revise tax tariffs for car parts which indirectly forces companies to source components from Chinese producers.
China has reclassified car parts as ‘fully finished cars’, something like CBU, which carries a 34% tax, double from the previous rate. Because parts are expensive to bring in now, in order to be economically competitive manufacturers have to source parts from Chinese producers to avoid the high tax.
The problem is foreign car manufacturers are not allowed to setup their own businesses in China. They must partner up with an existing Chinese company, forced to accept minority shareholding. Allowing a Chinese company access to all your designs would only result in one thing, vehicle piracy!
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