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Foreign carmakers no longer bound by two-JV cap if third JV produces BEVs

BEIJING – Foreign carmakers are no longer limited to having a maximum of two vehicle joint ventures if the third is set up to only produce battery electric vehicles or if they acquire other carmakers in China together with their existing Chinese JV partners, according to the Catalogue for the Guidance of Foreign Investment Industries (Amended for 2017) released by the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) on June 28.

The 2017 version, which is scheduled to take effect on July 28, will override a version released by NDRC and MOFCOM on March 10, 2015. 

The 50:50 equity share requirement on Sino-foreign vehicle JVs, however, remains in place.

The latest Catalogue is another sign of further opening up of the Chinese market and the central government’s efforts to further relax curbs on foreign investment. It comes a day after Chinese Premier Li Keqiang said at the Summer Davos in Dalian, Liaoning Province that “China will further expand market access in the service and manufacturing sectors, relax restrictions on foreign ownership, and treat domestic and foreign companies on an equal basis.”

Volkswagen is the first foreign automaker to have benefited from this new rule, having received approval for JAC-Volkswagen – its third JV in China after SAIC-Volkswagen and FAW-Volkswagen – in May.

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