From big countries to strong countries, the automobile industry policy may change

“How will the auto industry policy be adjusted during the 12th Five-Year Plan period?” At the 2010 International Forum for the Development of China's Auto Industry held recently, government officials and industry experts attending the conference were chased by the media to ask the same question.

In the meeting's schedule, there is a special session about the "12th Five-Year" automobile industry policy planning ideas discussion round table. At this closed-door roundtable, Dong Yang, secretary general of the China Association of Automobile Manufacturers, and Fu Lianxue, deputy director of the Institute of Information Research of the China Automotive Technology Research Center, made keynote speeches on this topic.

In fact, since the beginning of last year, the next step in the Chinese auto industry, which has passed the annual sales threshold of tens of millions of cars, has become an important issue for people in the industry. Among them, how to adjust the automotive industry policy that has an important guiding role in industrial development during the “Twelfth Five-Year Plan” period has attracted much attention. The relevant departments commissioned the China Automobile Industry Association and the China Automotive Technology and Research Center to make relevant research reports. Dong Yang and Fu Lianxue’s two thematic reports on the Roundtable Forum came from this.

At this round table, new energy, internationalization, and mergers and reorganizations were the three topics most discussed by the participants. "Now everyone's concern and heated debate is also a major problem in the automobile industry policy during the 12th Five-Year Plan," said Dong Yang.

According to the reporter’s understanding, individual experts also proposed that foreign-funded vehicle companies should be allowed to establish joint ventures in China, and the share ratio cannot exceed 50%. Some analysts believe that this proposal will hardly be written into industrial policy at this stage.

The five years of industrialization of new energy vehicles will be a crucial period for the transition from electric vehicles to scientific research to industrialization. It is also the key to whether we can seize the opportunity to make electric vehicles, a strategic emerging industry, bigger and stronger. The first Vice-Chairman of the National Committee of the Chinese People's Political Consultative Conference and the Minister of Science and Technology who gave a keynote speech at the forum expressed the view.

Wan Gang introduced in his speech that the "12th Five-Year Plan" electric vehicle special development plan has been drafted. "Planning" includes seven aspects that clarify the direction of R&D of electric vehicle industrialization and increase the financial subsidies for the development, optimization, and application of demonstration products.

The overall goal of the plan is to fully grasp the core technologies of electric vehicles, cultivate the capacity for independent development, give full play to the advantages of market and resources, and form a competitive industrial system for electric vehicles and key components, and put in electric vehicle charging stations and hydrogenation. Stations and other infrastructure to meet the needs of the development of electric vehicles for industrialization.

Officials from the Ministry of Industry and Information Technology also indicated that promoting the industrialization of new energy vehicles will be a key issue in the automobile industry policy during the “12th Five-Year Plan” period. Lu Xi, deputy director of the Industrial Policy Department of the Ministry of Industry and Information Technology, said that the Ministry of Industry and Information Technology has already begun to revise the 2004 version of the "Automobile Industry Development Policy." One of the orientations of the new automobile industry policy is to vigorously cultivate and develop the new energy automotive industry.

Wang Fuchang, deputy director of the Department of Equipment Industry of the Ministry of Industry and Information Technology, said that the development plan for energy-saving and new energy vehicles that will guide the development of China's new energy vehicles in the next 10 years will be reported to the State Council and is expected to be introduced at the end of this year.

According to previous media reports, the main objective of this plan is to achieve world leading electric vehicle technology and industrial scale in 2020.

Promoting mergers and reorganizations The recent boom in the automotive market and the boom in electric vehicles have also inevitably brought about some expansion of production capacity. In this forum, this issue has also attracted great attention.

Chen Bin, Director of the Department of Industrial Policy of the National Development and Reform Commission, issued a solemn warning at the meeting that the recent rapid expansion of production capacity of auto companies has caused the automotive industry to experience a crisis of overcapacity again, and new energy vehicles also exist.

Chen Bin said that in the future, a series of measures will be adopted in response to the crisis of overcapacity, such as strengthening the supervision of capacity utilization of enterprises; when examining and approving newly-added projects, the company will comprehensively review various indicators such as capacity utilization rate, capital strength, and independent research and development strength of enterprises, and strictly examine and approve them. Strengthen access control for new energy vehicles and prevent the launch of traditional car projects under the name of new energy vehicles.

He Guangyuan, former Minister of Machinery, said that at present, new energy vehicles in China are comparable to the “Great Leap Forward” in 1958. Many localities and companies are onboarding electric vehicles, but most of them buy key components for assembly from the outside, lacking core technologies. It is worthy of vigilance.

In response to the alarm over overheating and overcapacity in the auto industry, many experts and industry insiders believe that the next five years will be the climax of China's auto industry mergers and reorganizations.

Shen Jun, Vice President of Roland Berger International Management Consulting Co., Ltd. said in his speech that the current industry concentration of the Chinese auto industry is still relatively low. From the perspective of China’s auto companies’ competition and international development, mergers and reorganizations are very effective. Development means.

Lu Xi introduced the new automobile industry policy adjustment orientation, the first is to promote the structural adjustment and merger and reorganization of the automotive industry content.

On September 6, the State Council issued opinions on promoting mergers and acquisitions, and six major industries, such as automobiles and steel, will become the key industries for promoting mergers and acquisitions in the future. Subsequently, relevant officials of the Ministry of Industry and Information Technology said that they will introduce specific measures to encourage mergers and reorganizations.

Increasing the degree of internationalization The recent Geely acquisition of Volvo, SAIC, and GM's joint venture into the Indian market has shown that Chinese auto companies have strong intentions to enter the international market and operate globally.

Zhang Hao, director of the Department of Mechanical and Electrical Industry of the Ministry of Commerce, believes that the internationalization of China's auto industry is a proposition that deserves further study.

Wang Zhile, a research fellow at the Ministry of Commerce, said that to increase the degree of internationalization, it is necessary to actively go out and acquire others, but also allow international car companies to acquire domestic companies. "The Chinese auto industry should abandon the conspiracy theories of foreign capital, and it does not exclude mergers and acquisitions by foreign-funded enterprises. It does not require seniority in terms of family names."

Shen Jun said that the participation of Chinese auto companies in international mergers and acquisitions is a development trend in the future. He is optimistic about the international mergers and acquisitions of domestic parts and components companies.

One of the important principles in the adjustment of the new automobile industry policy is to insist on the combination of import and export, to encourage foreign investment to expand, and the long-term development of joint ventures, and at the same time to encourage domestic enterprises to enhance their independent innovation capabilities and international competitiveness.