China’s car makers still far behind in innovation – industry minister

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Tian Ying Beijing

China’s car makers were not competitive enough and lacked the capability to expand overseas, its industry minister said yesterday, signalling the government finds it premature to further liberalise the market.

“We have been playing catch-up in key technologies and lack cutting-edge innovation and technology that can lead in the global motor industry,” Industry and Information Technology Minister Miao Wei, whose ministry regulates the motor industry, said yesterday on the sidelines of the National People’s Congress in Beijing.

Miao’s comments came hours after the country’s main car association released data showing local brands lost market share for a sixth consecutive month in February.

Toyota and Honda extended their recovery from the anti-Japan protests of 2012, while Ford’s sales rose at their fastest pace in seven months in the biggest vehicle market.

“China needs to study how to turn the country into a stronger player in the motor industry from simply being a big one,” Miao said. “A superpower can’t play catch-up all the time. It needs to lead.”

The government was not working on a plan to change the rule limiting foreign ownership of Chinese joint ventures to 50 percent, Miao said, responding to a question about the merits of the rule requiring foreign car makers to partner with predominantly state-owned companies to manufacture vehicles in the country.

A spokesman for his ministry said last month that local car makers were too weak and needed to increase collaboration with foreign companies.

Li Shufu, the billionaire chairman of Zhejiang Geely, China’s first private vehicle maker, said last week that he was in favour of allowing foreign car makers to control their operations to encourage competition and bring down prices.

A Ministry of Commerce official sparked a debate last year after saying that local car makers should prepare for the day when the foreign stake limit was relaxed. The comments, made during an industry forum discussion, prompted the country’s main automotive association to say that Chinese brands would be “killed in the cradle” if foreign vehicle makers were allowed to become more independent from their domestic partners.

Wholesale deliveries of passenger, multi-purpose and sport utility vehicles climbed 18 percent year on year to 1.31 million units last month, the state-backed China Association of Automobile Manufacturers said yesterday. That compares with the median estimate of 1.27 million units in a survey of five analysts.

Chinese brands accounted for 38.4 percent of sales in February, down 4.6 percentage points from a year earlier, the association said.

“China’s home-grown motor industry is facing huge challenges despite being in the early stage of development,” Dong Yang, the secretary general of the association, said at a briefing in Beijing. “Internally, there are also issues such as weak innovation and competitiveness.” – Bloomberg

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