REPORT: China To Drop Joint Venture Requirement For Foreign Car Companies

REPORT: China To Drop Joint Venture Requirement For Foreign Car Companies

China is looking at doing away with their mandatory rule forcing automakers to enter into 50/50 joint ventures with local Chinese auto makers.

This arrangement allows Chinese automakers to gain knowledge from auto makers that are already established, allowing for a an accelerated learning curve while keeping some of the profits at home. However, the arrangement has intellectual property implications that made many automakers uneasy, and doing away with the forced joint ventures would open up China’s auto market and be a strong measure of goodwill towards foreign car makers who wish to invest capital into the Chinese market. Furthermore, it would eliminate the awkward bureaucracy that many joint ventures fall victim to, due to overlapping levels of executives who must approve of corporate decisions.

[Source: The Truth About Cars]