After nearly five years of transition period, China's passenger car stock ratio is limited to the end of 2022.
According to the Special Administrative Measures for foreign investment access (negative list) (2021 version) issued by the national development and Reform Commission and the Ministry of Commerce on December 27, 2021, from January 1, 2022, the restriction on the proportion of foreign capital in passenger car manufacturing and the restriction that the same foreign investor can establish two or less joint ventures producing similar vehicle products in China will be cancelled. Previously, China has cancelled the restrictions on the proportion of foreign shares of new energy vehicles in 2018 and commercial vehicles in 2020. The cancellation of the restrictions on the share ratio of passenger cars means that China's automobile industry has fully opened to the outside world.
In this regard, Cui Dongshu, Secretary General of the national passenger car Federation, told the Securities Daily: "While the restrictions on joint venture share ratio are continuously liberalized, the division of interests in the automobile market will also be rebalanced, and the competition in China's automobile market will be more sufficient. Under the background of the continuous improvement of the efficiency and scale of China's automobile industry, the liberalization of share ratio is conducive to the further improvement of China's automobile technology."
"The liberalization of passenger car stock ratio has little impact on the automotive industry." Talking about the impact of the liberalization of share ratio on China's auto market, Dong Yang, vice president of China electric vehicle hundred people's Association, believes that at present, the competition in China's auto market is very full, the change of share ratio of joint ventures will not reduce much operating costs, and there is little threat to independent brands.
It is worth mentioning that the "new share ratio era" of the automobile industry has opened. Who will become the first person to "eat crabs" and become the focus of the industry. According to the statistics of China's major Sino foreign joint venture automobile companies by the reporter of Securities Daily, among the 18 major traditional joint venture automobile enterprises and 7 major new energy joint venture automobile enterprises, the automobile enterprises with 50:50 equity of Chinese and foreign shareholders account for the vast majority, reaching 17. This year, the joint venture automobile enterprises that took the lead in realizing equity replacement may be born from Dongfeng Yueda Kia and brilliance BMW.
China's automobile industry policy "advances with the times"
full liberalization of passenger car stock ratio is conducive to innovation
In the early stage of the development of automobile industry, the industrial policy of "market for technology" came into being between long-term interests and short-term losses. In 1994, the automobile industry policy issued by China set the "upper limit of 50% shareholding ratio of foreign-funded enterprises". In the past 30 years, the policy has played a great role in protecting China's automobile industry and provided policy support for the rapid development of China's automobile enterprises.
However, competition is more conducive to the survival of the fittest. Therefore, on April 25, 2017, the medium and long term development plan of the automobile industry proposed to orderly liberalize the restrictions on the share ratio of joint ventures. In June 2018, the national development and Reform Commission and the Ministry of Commerce issued the Special Administrative Measures for foreign investment access (negative list) (2018 version), which defined the specific time node for liberalizing the share ratio limit for the automobile manufacturing industry. Among them, the restriction on the proportion of foreign shares of passenger cars that has attracted much attention will be officially lifted in 2022.
On December 27 last year, the national development and Reform Commission and the Ministry of Commerce officially issued the Special Administrative Measures for foreign investment access (negative list) (2021 version) and the Special Administrative Measures for foreign investment access in the pilot free trade zone (negative list) (2021 version), which once again made it clear that China would cancel the restriction on the proportion of foreign shares in passenger car manufacturing from January 1, 2022, And the restriction that the same foreign investor can establish two or less joint ventures producing similar vehicle products in China.
It is generally believed in the industry that the restrictions on the proportion of foreign shares of special vehicles and new energy vehicles will be abolished from 2018; In 2020, the restriction on the proportion of foreign shares in commercial vehicles will be abolished; In 2022, the restriction on the proportion of foreign shares in passenger cars will be abolished, and the restriction on no more than two joint ventures will be abolished. China's automobile industry policy truly reflects "advancing with the times, changing with the events and changing with the situation". After nearly five years of transition, China's automobile industry has been fully open to foreign investment.
It should be pointed out that liberalizing the share ratio of foreign capital will help stimulate market vitality, promote the reform and adjustment of Chinese auto enterprises through competition, and then promote the upgrading of the whole industry. However, whether foreign-funded enterprises will develop independently without Chinese enterprises needs to consider many factors. In fact, the share ratio structure of joint venture is a measure of the added value that can not be replaced by Chinese and foreign enterprises in joint venture. Under the established mature Sino foreign joint venture model, restructuring and renegotiation are not completely free of costs and risks.
"If the foreign party increases the share ratio of the joint venture and wants to share more profits, correspondingly, it may not be conducive to mobilizing China's enthusiasm when China needs to play a more role." Therefore, Dong Yang believes that both sides of the joint venture will be more cautious about the change of share ratio.
"The change of share ratio contract is very important." Zhang Xiuyang, Secretary General of China passenger car industry alliance, said that the change of joint venture share ratio involves the company's strategic adjustment, major business negotiations and even the change of major shareholders. It is not easy to adjust. If it is not for the urgent need to change the existing interest distribution and pattern or the major business direction, there will not be much change in the short term.
Overall, "the liberalization of share ratio not only reflects that China's automobile industry has a better market environment of reform and opening up and fair competition according to law, but also makes it easier to fully stimulate market vitality and force Chinese automobile enterprises to deepen reform." Cui Dongshu believes that the liberalization of share ratio is the general trend, which will promote the transformation and upgrading of China's automobile industry and become bigger and stronger.
equity changes of joint venture vehicle enterprises are increasing
who will spend the first case?
Today, the "new share ratio era" of automobile manufacturing industry has officially opened the curtain. In the "first year" of liberalizing the restrictions on share ratio, who will first promote the change of share ratio and who will become the first person to "eat crabs" has obviously become the focus of the industry again.
The reporter observed that after the deregulation of the share ratio limit was made clear in 2018, many joint venture car enterprises or newly established joint ventures no longer use the past practice (50:50) as the share proportion of joint ventures, and the cases of share ratio change have also increased explosively.
In October 2018, BMW increased its shareholding in brilliance BMW joint venture to 75%, which is called the first case of foreign capital share increase after the liberalization of foreign capital share ratio; In February 2020, Sichuan Hyundai completed the equity replacement, and Hyundai Auto Co., Ltd. (Hyundai Motor of Korea) became the only shareholder, creating a case in which China's first joint venture car enterprise was transformed into a wholly foreign-owned car enterprise.
In March 2020, GAC Honda wholly acquired and merged Honda Motor (China), which became the first case of Chinese capital "incorporating" foreign capital in the era of "ratio of new shares"; In December 2020, JAC Volkswagen Co., Ltd. was renamed as "Volkswagen (Anhui) Co., Ltd." Volkswagen China investment holds 75% equity of Volkswagen (Anhui); In the FAW Audi new energy joint venture newly established by FAW and Audi in 2020, FAW's equity accounts for 40%, while the remaining 60% belongs to Audi. In addition, in 2021, Southeast automobile, FAW Group, Dongfeng Automobile Co.Ltd(600006) and Tengshi have also carried out equity transfer operations of different scales.
From the current situation, there are two joint venture auto enterprises that take the lead in realizing equity replacement this year, namely Dongfeng Yueda Kia and brilliance BMW. Among them, Dongfeng Automobile Co.Ltd(600006) Group Co., Ltd. has decided to withdraw its capital directly from the joint venture; As for BMW Brilliance, according to the agreement, BMW will also complete the capital and share increase of BMW Brilliance in 2022. The news that Daimler wanted to increase its stake in Beijing Benz has yet to be further confirmed.
Zhang Xiuyang believes that the reason why the equity change of the joint venture is of concern is that most traditional joint venture enterprises are "profit cows" of China automobile group. Based on the huge scale and sustainable growth potential of China's automobile market, the foreign side also regards China's joint venture as an important profit output platform. It can be predicted that with the formal liberalization of equity restrictions, the equity competition of the joint venture parties may be concentrated.
(source: Securities Daily)
