With the ongoing trade war, it appears that China may be attempting to reduce restrictions regarding certain industries. This includes a proposal to allow for full ownership of car makers in China within five years.
This is a significant concession in light of China’s auto industry being relatively new. The proposal would end requirements that car makers do business through state-owed partners. Such past practices have resulted in car manufacturers having to share their technology with possible competitors.
Opening up the automotive industry
General Motors and Ford Motor Company have long done business in China. General Motors formed a joint venture with its partner in Shanghai over 20 years ago. It now has 10 joint ventures with partners in China.
While some General Motors vehicle have not sold well in the U.S., they have sold extremely well in China. In fact, sales of Buick in China probably have kept this brand in existence. Buick is soon planning on marketing a new hybrid vehicle in China.
We still don’t know what moves the U.S. will take when it comes to trade with China. Due to concerns that Chinese interests force foreign companies doing business there to share technology, the U.S. may retaliate through the use of higher tariffs.
As China has had a prohibition on electric car companies going to China to do business, Tesla may be in the best position of any car manufacturer to benefit from changes in Chinese policy. There apparently are plans in place for the Chinese government to remove these prohibitions.
It is to the benefit of American companies to consider marketing their products in China. Chinese citizens appear to prefer purchasing American-made cars. But companies need to prepare a solid strategy before taking such a step. There is a need for entrepreneurs to consult with attorneys who understand Chinese law and who are able to establish a network to ensure success.