As growth in the Chinese automobile market decreases, manufacturers are seeing their profit margins rapidly contract. In particular, joint ventures' own brands have been performing poorly. In response to questions posed on the floor of the ongoing Chengdu Motor Show, Chen Jianguo, deputy head of the National Development and Reform Commission's Industry Coordination Department, said that the government does not have a clear economic policy in place to support development of joint venture's own brand projects, Xinhua reported today.
Not long ago, Su Bo, deputy minister of Industry and Information Technology, said the government would support joint ventures' own brand projects. The news attracted attention from across the industry. However, Mr. Chen's (pictured) statements signify that there will be no such policies in the immediate future.
"Joint ventures' own brands pose a systematic problem which cannot be dissected simply," Mr. Chen said. He emphasized, "if joint ventures don't allow for [domestic] research and development, then [they] will have to continue [relying on] foreign technology and models." Mr. Chen said that for the industry to properly develop, both Chinese and foreign teams have to invest and build new technology together.
When asked about concerns that joint ventures would use outdated products and technology to create products for their own brands, Mr. Chen said that was an issue for enterprises to work on by themselves. The government has no way to tell enterprises what technology they should use.
Mr. Chen also commented on the issue of unclear subsidy policies for hybrid vehicles in China. According to Mr. Chen, as the country currently lacks a body specifically overlooking new energy vehicles, there is no clear set of standards to judge the energy savings of hybrid models. As such, it is impossible to discuss the implementation of such policies.
Finally, when asked about the introduction of policies supporting domestic manufacturers, Mr. Chen said that such policies are very hard to agree upon. According to his predictions, the chance of such policies being announced within the year is very small.
