China to drop joint venture rule for foreign automakers?

�� · #1 12-11-2010, 04:10 PM

China is an ever-increasingly juicy slice of pie for automakers from around the world thanks to citizens with a sudden explosion of expendable cash. Still, setting up shop in the People's Republic isn't without its pitfalls. Most notoriously, foreign automakers are forced into 50/50 joint ventures with local manufacturers by the Chinese government. The move helps the local boys learn by leaps and bounds by shadowing established automakers' transplant operations. Now it looks like that rule may vanish sooner rather than later. According to The Truth About Cars, Liu Shijin, the deputy director of the State Council Development Research Center, has made waves by talking about doing away with the 50/50 rule altogether.

That means that chances are, someone higher up in the food chain has been meditating on a similar move. If the joint-venture rule were abolished, we could very well see a new influx of international carmakers into the Chinese market. Most automakers prefer to not have to enter into mandatory joint venture agreements for a number of reasons. Beyond simply having to share technology and ideas, forced joint ventures can be cumbersome and costly to operate.

[Source: The Truth About Cars]

China to drop joint venture rule for foreign automakers? originally appeared on Autoblog on Fri, 12 Nov 2010 07:59:00 EST. Please see our terms for use of feeds.

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