China to remove restrictions on foreign ownership of local automotive joint ventures from January 1, 2022

China to remove restrictions on foreign ownership of local automotive joint ventures from January 1, 2022

China has announced that it will allow full overseas ownership of automotive companies in the country from January 1, 2022, according to a release by the country’s ministry of commerce and the National Development and Reform Commission.

Since 1994, foreign companies looking to enter China’s automotive industry have been required to set up as 50:50 joint venture with a local company to operate. Examples include FAW-Volkswagen, SAIC-VW, Changan Ford, SAIC-General Motors, GAC Mitsubishi, FAW Toyota, GAC Toyota, Beijing Benz (with BAIC), Dongfeng Honda, Guangzhou Honda (with GAC), BMW Brilliance and Changan Mazda.

The lifting of foreign-ownership limits will allow overseas companies to have full ownership of vehicle brands, freeing up investment in some of the biggest carmakers in the world. Additionally, foreign investors will no longer be limited to a maximum of two joint ventures in China, which was the case previously.

China to remove restrictions on foreign ownership of local automotive joint ventures from January 1, 2022

The latest move by the Chinese government comes a few years after it loosened the maximum ownership rate to 70% in 2018, which saw BMW largely take over its joint venture with Brilliance Auto Group. That same year, Tesla was given extraordinary permission to build a wholly owned factory.

With this announcement, newer brands like Rivian and Lucid will have access to the world’s largest passenger car market without having to find a local partner. Meanwhile, existing carmakers in the country can opt to take over their joint ventures completely, or their Chinese partners can withdraw from their joint venture.

As reported by Forbes, China’s joint venture schemes were designed to allow local brands to keep more of their profits and technologies in the country. The five biggest automakers in China – SAIC, FAW, BAIC, Dongfeng and Shangan – are all state-owned.

Looking to sell your car? Sell it with Carro.

10% discount when you renew your car insurance

Compare prices between different insurer providers and use the promo code 'PAULTAN10' when you make your payment to save the most on your car insurance renewal compared to other competing services.

Car Insurance

Gerard Lye

Originating from the corporate world with a background in finance and economics, Gerard’s strong love for cars led him to take the plunge into the automotive media industry. It was only then did he realise that there are more things to a car than just horsepower count.

 

Comments

  • lucid air on Dec 29, 2021 at 10:49 am

    sounds like the State needs cashflow. China economy red light imminent?

    Like or Dislike: Thumb up 2 Thumb down 10
    • Mike Tee on Dec 29, 2021 at 12:11 pm

      Non-chinese car manufacturers need China more than China needs them. Besides, allowing 100% ownership does not mean they will compete on equal terms (look at MY market). Legislation will be in place to allow local manufacturers to grow stronger.

      Japan and Korea’s domestic market is dominated by local manufacturers, the same will be the case in China. We will see Chinese brands getting stronger in the export market in future.

      To your original post, I think this has little to do with “China needing cashflow” as almost all the major manufacturers are already in the chinese market.

      Like or Dislike: Thumb up 8 Thumb down 1
    • Spin Too Much on Dec 29, 2021 at 3:35 pm

      Yeah, cash flow is vital to maintain its military might.

      Like or Dislike: Thumb up 1 Thumb down 0
  • China is removing the protectionism…Meanwhile in Malaysia, Perodua & Proton is still enjoying preferential treatment compared to other car imports.

    Like or Dislike: Thumb up 10 Thumb down 5
    • Proton owned by Geely, so what?

      Like or Dislike: Thumb up 3 Thumb down 3
      • Putin JV Kim Jong Un on Dec 29, 2021 at 2:08 pm

        Protong is still 51% owned by DRB,but beacuse it can go bankrupt without Geely,Geely with 49% bring in the right handed versions of China cars..is calling the shots.
        Without Geely,you can expect another Rm20 billion in bailout funds.

        Like or Dislike: Thumb up 3 Thumb down 1
      • Spin Too Much on Dec 29, 2021 at 3:32 pm

        Geely is only the shareholding strategic partner, not full owner of Proton.

        Like or Dislike: Thumb up 3 Thumb down 3
  • Vincent on Dec 29, 2021 at 11:22 am

    Even communist if more transparency than Malaysia! Bolehland will need tongkat forever!

    Like or Dislike: Thumb up 10 Thumb down 6
    • iThink on Dec 29, 2021 at 2:41 pm

      Naza Ria – first national MPV,

      https://www.thestar.com.my/news/nation/2003/08/28/pm-launches-first-national-multipurpose-vehicle

      RM98,888 2.5L V6.

      Everybody got chance. But many not able to be a quality durable peace of mind game changer.

      Like or Dislike: Thumb up 2 Thumb down 1
  • HANSSEN on Dec 29, 2021 at 11:46 am

    confirmed. china is the biggest economy on earth. fear not. other economies rely on china most

    Like or Dislike: Thumb up 3 Thumb down 1
    • Spin Too Much on Dec 29, 2021 at 3:39 pm

      Its major property developers are trying to settle their huge debts. Maybe they thought biggest economy = huge debts, when it comes to the global free market economy

      Like or Dislike: Thumb up 2 Thumb down 1
  • Izhar on Dec 29, 2021 at 6:02 pm

    Habislah ketuanan Cina di China.

    Like or Dislike: Thumb up 7 Thumb down 5
  • Semi-Value (Member) on Dec 31, 2021 at 2:50 pm

    no more shanghai da zhong

    Like or Dislike: Thumb up 1 Thumb down 0
 

Add a comment

required

required