BEIJING – “China must open up the auto market to make competitive automobiles,” said Ma Yu, director of Foreign Investment Research at the Institute of Research under the Ministry of Commerce (MOFCOM).
According to Ma, development strategies of China’s auto industry are based on planned economy instead of market economy, which greatly restricts the competition among auto enterprises. It has caused many deficiencies in auto industry’s development.
Ma pointed out that though China has a 60-year auto history, the auto industry still relies heavily on foreign technologies, joint venture partners and the government protection. It lacks confidence in independent innovation and competition.
“State-owned enterprises (SOEs) in China have the ability to develop independently but they claim they are not ready for competitions,” said Ma. “Besides, SOEs have got high profitability but they did not contribute their profits in independent innovation.”
“Looking back on the three development phases of China’s auto industry, we can find that in those phases, auto industry is always government-led, SOE-led and OEM oriented,” said Ma. “In this case, sufficient competition was not allowed, which discouraged innovation and product optimization.”
Ma said the equity share restriction should be removed. “Joint ventures cannot cultivate competitiveness of domestic industry,” said Ma. “The 10 years’ protection period is long enough to build up the competitiveness, but it failed.”
Ma believes that opening China’s auto market for competition is the fundamental way to build a strong auto industry. He made four suggestions for opening China’s auto market, which are to relax market access, remove equity share restriction, lift auto import control and reform state-owned enterprises.