Independent automakers shouldn’t establish

　　Recently, there have been many pieces of news about JV in auto industry. Chang and PSA has already signed contract. The localization project of Subaru is in the negotiation. Besides, there are talks about Suzuki is seeking new partner and Jaguar Land Rover will be produced locally. It seems that a new “joint venture tide” will occur to China.

　　After foreign joint ventures has begun for almost 30 years in which most world-class automotive companies have taken root in China, do China automakers still need to establish JVs with the second-rate, or even third-rate foreign auto companies? What can these companies bring to domestic manufacturers that ever can not be learned from Toyota, Mercedes, Ford and other international corporations? After all, we must answer this question: What is the purpose to establish joint ventures?

　　According to some predecessor in auto industry, “market for technology” is the main purpose of the central government had chosen to approve the establishment of joint-ventures within the auto industry.

　　Although there have always been different understanding about whether the opened market had really brought in technologies, objectively speaking, the domestic automobile manufacturers have accumulated funds and advanced management experience as well as trained talents on technology, management and marketing, which had settled down the base for the development of the independent passenger car brands during the past 10 years. From this perspective, whether the original intention “market for technology” has been achieved or not, Sino-foreign joint ventures, Sino-foreign cooperatives has played a crucial role in promoting the overall level of China automobile industry.

　　However, at that time the technologies we wanted was not just the high quality products and manufacturing as well as advanced management experience, but also the development process, system, test specifications and other generalized or “techniques” or “abilities” for such a especial product as cars. Only with the latter, our domestic auto companies can really grasp the essence of manufacturing cars and nurture their core competitiveness.

　　From this perspective, it is clear that the previous joint venture process has not fully realized the original intention of “Market for Technology”, which is also the reason why the several large automotive group carried out joint venture cooperation suffered years of criticism. The above-mentioned benefits of funds and talents are not resulted from technology spillover other than initiative actions during the development process of Sino-foreign joint ventures. In some period, many companies even completely abandoned the “market for technology” intention and went on a one-sided way of pursuing short-term economic benefits rather than exerted themselves in independent research and development.

　　These lessons are still worth learning today. To these domestic car manufacturers who are newly planning joint ventures, if they plan to gain he development process, system and test specifications that are really helpful to the development of the corporations, it is certainly worth encouraging. However, if they only pursue to introduce products through a joint venture to seek sales and profits, then the ambition of the business leaders is too unappreciable.

　　Of course, maybe to some domestic enterprises, this time to establish JVs is only to avoid risks through decentralized operations or only an unimportant complement to the overall layout other than their future core strategy, then it another cup of tea.

　　(Translator: Yalong/Jessie)

　　See original Chinese report Please click: http://auto.sohu.com/20100730/n273873828.shtml