JVs spring up under new situation

Under the direction of China’s basic policy of reform and opening-up, our automobile industry began to seek further promotion by the means of establishing joint ventures. Thirty years passed, today our automobile industry has formed a relatively integrated structure which contains heavy-duty, medium-duty and light-duty vehicles. Although our production of automobiles is only 159,000 in 1978, the number has reached to 9,345,000 in 2008, which satisfies the basic development of national economy. Joint ventures, which have already become a vital part of our automobile industry, play a great role in this course.

According to China Auto News, in 1978, China produced totally no more than 5,000 saloons and off-road vehicles. To meet the growing demand in domestic market, a faster way was to import advanced technology and to improve productivity.

Early in 1978, chairman of U.S. General Motors Corporation suggested China to adopt the form of joint investment when he visited China’s second car manufacturing plant. Later Chinese government made a decision to take this advice.

Funded jointly by Beijing Automobile Works and American Motors Corporation, Beijing Jeep Corporation, LTD was formally founded in Beijing in January of 1984. Then Shanghai Volkswagen and Guangzhou Peugeot was established.

In order to solve the problem of lacking the capacity to produce heavy-duty truck, China National Heavy-Truck Corporation was founded in 1980s. Then together with China Automobile Import and Export Corporation, it introduced Steyr 91 Series models that not only made up the technique insufficiency of our automakers but also pushed forward the whole heavy-truck industry in China.

Till 1990s, the co-operation between China automobile industry and foreign enterprises were getting deeper. Two car joint ventures FAW-Volkswagen and Shenlong Fukang were founded at this stage. What is more important, the models produced by these joint ventures were becoming more localized. At the same time the price of cars began to decrease as the competition getting fiercer.

After China entered into WTO, our automobile industry proceeded to a new stage at full speed. The government attached great importance to this area by adjusting the industrial policy, reforming the management system and expanding the opening-up so as to create a more relaxed environment for automakers.

The rip-tide of co-operation of our automobile industry came after the year of 2000 when joint ventures such as Changan Ford, Beijing Hyundai, Tianjin FAW Toyota, Nissan and BMW Brilliance was founded successively. The great changes brought about by these joint ventures also appeared around this year. More and more advanced technologies and philosophies were brought into China too. Ford first brought up the concepts of Global Car and World Car. Its models of Mondeo and Carnival almost simultaneously started their exports to the China market as to other countries in the world. Joint ventures such as Shanghai GM even set up a product R & D Center. As the model and technique were getting closer to the International level, the price gap of cars between domestic and international market was narrowed down.

Today Chinese automobile market wins an increasingly important position in the whole world. Accordingly, the nature of the co-operation between our automobile and overseas-invested enterprises is getting changed. The pattern of the international automobile industry is different too. The whole national automobile industry gains a new cognition that technologies imported should be key ones that really suit the demand in domestic market.

On July 6th this year, Guangzhou Automobile Group Co., Ltd. signed the agreement with Fait that the latter come back to China through the way of they two establish a joint venture. The contents of the new cooperation will no longer confined to technological cooperation but go deep into aspects such as the idea of designing, advanced management experience and staff training.

Only ten days later, China National Heavy Duty Truck Group announced to sign a series of legal documents including shareholders agreement, technology license agreement and share purchase agreement which German company MAN.

On August 8th, Fukuda and Daimler together declared to sign letter of intent for Global cooperation, finally ending their five-year-long discussion.

Also in August, General Motors Company and FAW Group Corporation set up a new group for commercial vehicle in which they each side owns 50% of the shares.

The founding of these joint ventures and a series of other overseas acquisition of Chinese enterprises indicate another tide of cooperation between Chinese and foreign companies. And this time, Chinese enterprises will take more initiative.（Translator: Yalong/ Jessie）

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