One month ago (June 28), the National Development and Reform Commission and the Ministry of Commerce issued the "Special Management Measures for Foreign Investment Access (Negative List) (2018 Edition)". One month later (July 28), the negative list was officially At the same time, the special management measures for foreign investment access (negative list for foreign investment access) in the "Catalogue for the Guidance of Foreign Investment Industries (Revised in 2017)" were abolished.
The "2018 Negative List" has been reduced from 63 to 48, and liberalization measures have been introduced in 22 areas: one is to substantially expand the opening up of the service industry, the other is to basically liberalize the manufacturing industry, and the third is to relax the standards for agriculture and energy resources. Into. Among them, in the field of automobile manufacturing, the restrictions on foreign ownership in special vehicles and new energy vehicles will be lifted from July 28, the foreign ownership limit in commercial vehicles will be lifted in 2020, the foreign ownership limit in passenger vehicles will be lifted in 2022, and no more than two joint ventures will be joint ventures. This is basically in line with the timetable for the opening up of auto joint stock ratios previously announced by the Development and Reform Commission.
Special vehicles and new energy vehicles become the vanguard of opening up
It is the 40th anniversary of my country's reform and opening up, and special vehicles and new energy vehicles have become the vanguard of the expansion and opening up of my country's automobile industry. Some analysts pointed out that from the order of liberalization of the entire shareholding ratio restriction, it can be found that the cancellation of my country's auto industry joint venture shareholding restrictions is actually liberalized in order from strong to weak. Choosing to use the special vehicle market and the new energy vehicle market as the entry point is to start reforms from the strong side.
Public data shows that in 2017, my country's special-purpose vehicle output was 1.6 million, a year-on-year increase of 38.7%; while in the same period, my country's overall automobile market output was 28.12 million, a year-on-year growth rate of only 3.2%. At present, this market is mainly controlled by state-owned enterprise groups such as FAW Group, Dongfeng Motor, and China National Heavy Duty Truck. Foreign-funded enterprises are relatively disadvantaged in this field.
Therefore, starting from the special-purpose vehicle market segment, liberalizing the shareholding limit of joint ventures will not affect the pattern of the special-purpose vehicle market, and it can gradually open the pace of liberalizing the shareholding ratio of joint ventures in the entire industry.
At the same time, the liberalization of joint venture shares in the field of new energy vehicles is also true. In recent years, under the stimulus of a series of favorable policies and the transformation and upgrading of the automobile industry, domestic independent brands have been deployed in the new energy automobile market and have achieved certain results. In 2017, my country’s cumulative sales of new energy vehicles reached 777,000, a year-on-year increase of 53.3%, making China the world’s largest new energy vehicle production and sales country for three consecutive years.
Although the huge market development potential has also attracted a large number of multinational car companies to explore the layout of China's new energy vehicle market, compared with domestic independent brands, the layout of foreign car companies in the entire industry chain is slightly slower.
Take the lead in opening up the new energy vehicle share ratio restriction on the one hand, it shows the confidence of the Chinese government in its own brand new energy vehicles, on the other hand, it also hopes that the continuous influx of foreign capital will stimulate the formation of healthy competition in this market.
Cui Dongshu, secretary-general of the National Passenger Vehicle Federation, said: “While the restrictions on the shareholding ratio of joint ventures continue to be liberalized, the division of interests in the auto market will continue to be rebalanced. Competition in my country’s auto market will be more adequate, and the efficiency of China’s auto industry will be more efficient. Under the background of increasing scale, the liberalization of the stock ratio is conducive to the further improvement of China's automotive technology."
Foreign auto companies have long been gearing up
This time, with the formal implementation of the new version of the negative list, it means that foreign investors’ shareholding in the field of special vehicles and new energy vehicles and the number of joint ventures have been officially lifted. Compared with the special-purpose vehicle market, the industry is obviously more concerned about the impact of the liberalization of the new energy vehicle stock ratio.
Some people in the industry pointed out that the liberalization of auto joint venture shareholding restrictions means that the policy threshold for foreign investment and construction of factories has been lifted. In the future, foreign companies will accelerate their deployment in China, especially in the field of new energy vehicles.
Just as the industry has been rumored for many years that Tesla will build a factory in China finally made substantial progress this year. In fact, after receiving the heavy news from the Chinese government that the new energy joint venture shareholding limit was lifted in April this year, Tesla's construction process in China has been speeded up suddenly. First, Tesla (Shanghai) Co., Ltd. was registered and established on May 10, and two months later (July 10), Tesla head Musk went to China to sign a pure electric vehicle project investment agreement with Shanghai Lingang , The Tesla Gigafactory 3, which requires an annual output of 500,000 pure electric vehicles, settled in Lingang. However, the signing of the investment agreement is only the intention of both parties to actively promote, and there is no clear timetable for the time being. After overcoming the policy barriers, Tesla will face multiple obstacles such as production qualifications and capacity ramping in China.
In addition, there are also opinions that the restrictions on the shareholding ratio of joint ventures are liberalized, and there are still a small number of foreign companies that choose to build wholly-owned enterprises in a short period of time. Most companies will still prefer to acquire shares in joint ventures to maximize their benefits. For new energy car companies, the cost of capital and time is too high.
Not long ago, when the German luxury brand BMW chose to partner with Great Wall Motors, it took this as one of its considerations. For BMW, cooperating with Great Wall Motors, which has mature manufacturing processes and a strong SUV market foundation, can save huge costs, including not only economic costs, but also management costs and time costs.
At the same time, compared with the joint ventures established in the past two decades, the joint venture between Great Wall and BMW, as the first case after the new energy vehicle share ratio was determined and liberalized, has shown many new highlights.
First of all, the previous joint ventures with foreign companies were all central enterprises or large state-owned enterprises. As a private car company, Great Wall Motors “has no joint venture qualifications”; secondly, it is precisely because of this status that the joint venture between Great Wall and BMW is no longer government-led. "Arranged marriage" is the result of long-term "free love" between the two parties. On April 18, 2016, Great Wall and BMW signed a non-disclosure agreement for cooperation. The two parties began to negotiate a joint venture until the two parties signed a letter of intent for cooperation in February this year, and then signed a joint venture contract in Berlin, Germany on July 10, which lasted more than two years. time. Finally and most importantly, although the equity ratio of the two parties to the joint venture is still 50:50, this is the result of the negotiation between the two parties through in-depth understanding and understanding of each other's strength and strategic intentions.
This data on the joint venture share ratio shows that the new energy vehicle joint venture contract signed afterwards will reflect the strength of the two parties’ contribution to the joint venture company. 50:50 is no longer a policy "red line" that cannot be touched. If you want to have more voice and initiative in the joint venture, you first need to improve your own strength, which is equally important for the commercial vehicle and passenger vehicle companies that are about to be liberalized.
The last 5 years of passenger cars
According to the liberalization sequence of the "2018 Negative List," the restriction on the shareholding ratio of commercial vehicle joint ventures will be lifted in 2020. In terms of market share and sales volume, the cumulative annual sales of commercial vehicles in 2017 was 4.16 million, a year-on-year increase of 13.8%, of which the sales of independent brands accounted for 96.6% and the sales of joint venture brands accounted for 3.4%.
Zhong Weiping, secretary general of the Commercial Vehicle Chamber of Commerce of the China Automobile Dealers Association, said, “The commercial vehicle field is similar to the special-purpose vehicle market. Most of them are dominated by domestic independent brands, and the proportion of exported vehicles is relatively high.”
As the last step in the liberalization of the joint venture share ratio, the restriction on the foreign share ratio of passenger cars will be lifted in 2022. "In fact, in the passenger car market, independent brands are still relatively weaker than joint venture brands. Self-owned brands attract consumers through low prices, but the overall cost performance is better than joint venture brands." Cui Dongshu said frankly.
It is foreseeable that when the restrictions on foreign shareholding in the automobile industry are fully liberalized, competition in my country's automobile market will become more fierce, and the industry reshuffle will accelerate. How independent brands can create more competitive products within 5 years will become Its foundation has also become its bargaining chip in negotiations with foreign investors.