China Wants OEMs To Introduce Low Cost Brands Made Locally

When dealing with an authoritarian state that exercises substantial government control of the economy, you generally know whose rules you’re playing by – and everyone from automakers to tech companies are happy to capitulate to the demands of the Chinese government, with car companies establishing joint ventures with local automakers for the sake of being able to compete in the world’s largest auto market.

China is stipulating that around 30 percent of additional capacity (as agreed upon in existing contracts) will have to be set aside for the Chinese market and sold under separate, low-cost brands. According to an analyst quoted by the Financial Times, the motive is not so much profit as intellectual property. Chinese car makers are often denied access to the more advanced technologies when they embark on a joint venture process, and the report seems to suggest that auto makers will have to bend to the will of Chinese industry in order to keep getting market access.

[Source: Autoblog]