Beijing Should Listen to Private Automakers

Local Firms Are Growing Fast, But the Government Ignores Private Players, Says Yang Jian at Auto News China

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SHANGHAI ( -- Earlier this year, Beijing asked 10 Chinese automakers to help draft a strategy to develop the electric-car industry.

All of those companies were state-owned. But the automaker that has pushed most aggressively to design electric cars -- the privately held BYD Auto Co. -- was not invited. That's absurd.

Yang Jian
Yang Jian
Private Chinese companies such as Zhejiang Geely Holding Group Co. and BYD have achieved remarkable success after entering the auto industry less than 12 years ago.

Yet these companies have been repeatedly ignored by the Chinese government when it comes to the formulation of important industry policies.

For its electric-car strategy, the government is consulting Shanghai Automotive Industry Corp. (SAIC), China FAW Group Corp., Dongfeng Motor Corp., Changan Automobile Group Corp., Guangzhou Automobile Industry Corp. (GAIC), Beijing Automotive Industry Holding Corp. (BAIC), Chery Automobile Co., Shenyang Brilliance Jinbei Automotive Co., Anhui Jianghuai Automobile Co. and Sinotruck Corp.

These automakers delivered their recommendations in April.

Beijing adopted a similar approach in March 2009, when it drafted a plan to restructure the domestic auto industry. Under the plan, China's fragmented domestic auto sector would consolidate around eight companies.

The eight companies named in the restructuring plan were SAIC, FAW, Dongfeng, Changan Auto, BAIC, Guangzhou Auto, Chery and Sinotruck. Again, all are state-owned.

The plan didn't even mention the fast-growing private automakers. BYD is now the largest passenger vehicle manufacturer among domestic Chinese brands, while Geely is the third largest.

Geely's recent acquisition of Volvo Cars has given the company global prominence. Yet Geely is not listed among the companies assigned by the government to take over domestic peers.

Private Chinese automakers are growing fast, and the government cannot pretend they do not exist. Unless Beijing can give due consideration to private players, its policies will have little relevance to today's domestic auto industry.

Yang Jian is the managing editor of Automotive News China, a publication of Crain Communications.

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