Chinese Want to Build Cars With Foreigners, Not for Them

New Brands Build in China Less Likely to Wear Foreign Badges, Says Auto News China's Yang Jian

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SHANGHAI ( -- Just two years ago, domestic Chinese automakers were perfectly content to form joint ventures with international automakers and build cars with foreign badges.

Yang Jian
Yang Jian
That approach is history. Today's new ventures are more likely to create jointly owned brands than produce cars that bear the overseas partner's badge.

The shift started in March when BYD Co. and Germany's Daimler announced a joint venture to produce electric vehicles in the south China city of Shenzhen. They agreed to launch a new, as-yet unnamed brand to be owned by both companies.

In July, Changan Automobile Group Co. formed a partnership with PSA Peugeot Citroen to produce vehicles for a joint brand. The two companies first will produce the Citroen DS models in Shenzhen, then launch a joint brand.

Earlier this month, Dongfeng Motor Corp. announced that the central Chinese government had approved its joint venture with Taiwan's Yulon Motor Co. Dongfeng said the venture, located in Xiaoshan in eastern China's Zhejiang province, will build passenger vehicles for a jointly owned new brand.

Why are these joint ventures so eager to launch badges in a market that already suffers a surfeit of brands?

In most cases, the Chinese partner requested it. Nurtured by China's booming new-vehicle market, domestic automakers have rapidly gained sales, capital and assets over the past two years. They have become more assertive when negotiating joint ventures. They are no longer content to let joint ventures function solely as locally based plants for international brands.

Moreover, the central government has urged state-owned automakers to launch their own brands -- and the domestic automakers are eager to do so. A newly created brand offers them an opportunity to gain an equal footing with their international partners.

To be sure, the push to create joint-venture brands is not entirely new. In 2008, a joint venture between Honda Motor Co.and Guangzhou Automobile Group Co. unveiled a brand called Linian at the 2008 Beijing auto show.

The joint venture, called the Guangqi Honda Automobile Co., launched that brand at the Chinese partner's request. But it turned out to be a mere token; the Linian-brand vehicles never materialized. But that was two years ago. If Guangzhou Auto renews its request, I bet Honda will take it more seriously this time.

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

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