Global auto companies could be independent of Chinese partnerships in the future as the market grows, according to The Wall Street Journal's China Real Time blog.
Automakers like Ford Motor Co. and General Motors Co. only own 50 percent shares of their ventures, the limit due to Chinese government regulations. But talk at a recent auto forum hinted at a game change-up.
Chen Lin, a counselor at foreign investment and economic cooperation department of China's Commerce Ministry, appeared to agree that a review of the regulations was in order, suggesting the government and car companies study the impact a rule change might have, China Real Time reported.
"I think we should put it on the agenda," said Chen, according to official transcript of his comments, which were in response to a question from the Beijing Times.
Ford Motor Chief Executive Alan Mulally also responded to questions on the issue in a closed-door session accessible only to Chinese media.
"I think the different ranges for equity are natural evolution of opening up the market...we are pleased to be part of the solution," Mulally told reporters.
Later he told foreign reporters including China Real Time that Ford was "very, very pleased" with its joint ventures.
Volkswagen AG, which holds only 40 percent of the shares in its Chinese venture, may expand soon, according to a board member.
"We are in the process of extending our joint-venture contract," Weiming Soh, a member of the board of management at Volkswagen Group China, told China Real Time. "We would like to do more and therefore this is something that we have been discussing with our joint-venture partners."
Analysts say the current limits on foreign car makers discourage them from using China in their global operations.
"Foreign auto makers could really step up their game if China didn't have these joint-venture rules," Bill Russo, president of automotive consulting firm Synergistics Ltd, said.
Under the current regulations, outside automakers would have to share half of their profits with their Chinese partners if they built factories in China.
But while changing the system could mean more auto production in the country, Chinese partners would probably not be pleased. Many of them are state-owned giants that rely heavily on the lucrative joint ventures.
"If China allows foreign car makers to have a bigger stake or drop the ownership limit, Chinese auto makers will be put in an extremely unfavorable position to negotiate with foreigners," said Sa Boni, an analyst at market-research company IHS.
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