Bloomberg News

China Carmakers May Face Overseas Hurdles, European Chamber Says

February 28, 2012

Feb. 27 (Bloomberg) -- China’s exclusion of foreign automakers from a proposed list of fleet suppliers may prompt other countries to make it harder for the nation’s carmakers to expand, the European Union Chamber of Commerce in China said.

“As an industry you cannot expect to be warmly welcomed outside of your country, if at the same time you start closing the industry in your country,” Dirk Moens, secretary general of the chamber, whose members include Volkswagen AG and Daimler AG, said today by phone from Beijing.

China issued a preliminary list on Feb. 25 of vehicles that could be purchased by some official fleets and foreign carmakers including Volkswagen, General Motors Co. and Toyota Motor Corp. were not on it. If approved, the list would give domestic automakers an advantage in a fleet market worth about 80 billion yuan ($12.7 billion), China International Capital Corp., a Beijing-based investment bank, said in a report today.

Overseas brands have accounted for about 80 percent of the official vehicle pool in China, with Volkswagen’s Audi making up about one-third of government and state-linked enterprise fleets, according to Guotai Junan Securities Co.

The preliminary list is open for public consultation until March 9, according to the Ministry of Industry and Information Technology.

The openness of European countries that enabled Great Wall Motor Co. and Zhejiang Geely Holding Group Co. to make European investments may not be repeated, Moens said.

Assessing Effect

The European Chamber will work with its members to assess the effect of the proposal and may formally approach the government to contest it, Moens said.

The suggested procurement rules come less than two months after Premier Wen Jiabao’s government took conventional automaking off the “encouraged” foreign direct investment list. The move ended preferential treatment from the government for foreign automakers that build factories in the country.

Great Wall, China’s biggest sport-utility vehicle maker, is investing as much as $120 million on a car assembly plant in Bulgaria which opened last week, Xinhua reported Feb. 22.

A Chinese-led investment group including Geely bought Volvo from Ford Motor Co. for $1.8 billion in August 2010, completing the biggest overseas acquisition by a Chinese carmaker.

--Editors: Robert Fenner, Dave McCombs

To contact the reporter on this story: Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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