As we all know, if foreign car brands want to sell in China, there are two roads in front of them, either joint ventures or imports. For foreign car brands, if they want to go to the volume, they must establish joint ventures with domestic car companies, but the state also has strict requirements for joint venture companies.
First of all, the equity ratio of the two sides, foreign car companies can only occupy 50% of the shares of the joint venture company at most, and secondly, the joint venture company of the same foreign car company in China cannot exceed two, but this restriction will no longer exist next year.
Why was the 50:50 "share ratio template" originally stipulated?
It has to be said that the state's implementation of a 50:50 equity ratio for joint venture car companies can protect their own brands on the one hand, and on the other hand, it can also make foreign car companies profitable. For independent brands, especially for foreign car companies' joint ventures, they can fully learn the experience and technology of foreign auto giants; and for foreign auto brands, they can better open up the Chinese auto market. The essence of a joint venture is simply to exchange market for technology.
However, the shareholding limit is not permanent, and when China joined the World Trade Organization in 2001, the state won two decades of growth time for independent car companies. After all, twenty years ago, China's auto industry was really unsightly, and it was powerless in the face of foreign auto brands.
In the past two decades, have independent car companies grown? For some independent car companies that have established joint ventures with foreign car brands, not only have the technology not been changed, but they have developed a bad problem of not thinking of making progress, because of the restriction of the 50:50 equity ratio, they can easily make money from the joint venture. Li Shufu once said bluntly that the equity policy of joint venture car companies has made Chinese brands not think of making progress.
This can be reflected in the current existing pattern of independent car companies, independent head car companies Great Wall, Changan, Geely, in addition to Changan, Great Wall and Geely are private car companies, the dominant FAW, GAC, Dongfeng and other independent brands, aside from the joint venture car part, even the second-tier independent brands are not counted. Different from the state-owned car companies Lying Flat, private car companies have to develop their own core technologies in order to make a living, which is the case with great wall, Geely and BYD.
Equity restrictions have long been opened
As mentioned above, the state's restrictions on joint venture car companies will be fully opened in 2022, in fact, in the past two years, it has begun to gradually liberalize the policy, of which BMW Brilliance is an example. As early as 2018, Brilliance Group and BMW Group jointly announced that BMW Group would acquire 25% of BMW Brilliance for 3.6 billion euros.
At that time, BMW's stake in BMW Brilliance will reach 75%, while Brilliance only has the remaining 25%. After the announcement of the joint venture share ratio adjustment plan of BMW Brilliance, joint ventures such as Changan Ford and Beijing Benz have also been rumored to be interested in increasing the proportion of foreign shareholdings, and after the equity restrictions are fully relaxed next year, there will inevitably be more foreign car brands that want to increase their shares in the joint venture, after all, no one wants to raise "white rice" guys.
In addition, the provision that foreign car companies must enter the domestic joint venture has also been broken on Tesla, and Tesla's domestic production is also a foreign car company that has not been jointly invested with its own brands at domestic prices. Moreover, the provision that foreign capital can only joint venture with two independent brands at most is the same, Toyota and Daimler have thrown olive branches to their own brands in the field of new energy, established new joint venture companies, and are mainly focused on the new energy market.
Joint venture cars will usher in a big price reduction next year?
Finally, after the change of the equity structure of the joint venture company next year, the joint venture car will usher in a price reduction, which can be clearly said here that it is completely impossible. In the short term, there will be no diving changes in car prices. Although the restriction on the share ratio has been lifted, the share ratio is still a long game, and the foreign side is unlikely to completely kick the Chinese side away. Joint venture brands are not going away anytime soon. In the long run, it is bound to lead to increased competition, and the new policy will stimulate foreign brands to bring more new technologies and models to China, bringing more choices to consumers.
The change in the equity structure of the joint venture company is more to accelerate the situation of survival of the fittest, the weaker the independent sector of Chinese car companies, will accelerate out of the market, the joint venture "profit cow" will also reduce the amount of milk, will change the "lying flat" phenomenon of some independent car companies.
Starting from the market environment, the change in the equity structure of the joint venture company is definitely good for independent brands, of course, this refers to such powerful independent brands as Chang'an, Great Wall, Geely, ANDD, for BAIC and Brilliance, it will obviously not be better.
Write at the end:
It is said that Chinese car brands are all greenhouse flowers, and if there is no policy protection, it will shatter when touched, which was true twenty years ago. But now, China's auto industry has developed to a certain extent, we are no longer weak, compared with foreign brands, in some aspects have completed the transcendence, especially new energy, intelligence, China's local auto power is more dynamic. Changes in the shareholding structure of joint ventures will not have much impact on China's auto industry.
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