China has announced it will allow complete foreign ownership of car companies in the country by 2022, thus opening up the world’s largest car market. The move will, in effect, change policy towards foreign carmakers that had to - till now - partner with state-owned firms.
Besides opening up the market, this plan should also help curb the theft of intellectual property by Chinese manufacturers. This means blatant copies of foreign cars - the Range Rover Evoque-aping Landwind X7 is a case in point - will be less likely.
The restrictions on direct entry for foreign carmakers unfortunately helped fuel China’s trade dispute with US President Donald Trump, but Chinese officials said this decision hasn’t been taken to ease tensions.
The country’s state planner said last week that it would remove foreign ownership caps in a staggered manner – by 2018 for companies making fully electric and plug-in hybrid vehicles, by 2020 for firms making commercial vehicles and by 2022 for all carmakers.
China had imposed ownership restrictions in 1994, which limited foreign manufacturers from owning more than a 50 percent share in any local venture. This policy was implemented to give Chinese carmakers a chance to compete on an even footing.
Viraaj Bhatnagar
Uday Singh
Suraj Viswanathan
