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China Car Billionaire Wants Competitors to Bring It On

Geely Automobile Holdings Ltd. Chairman Li Shufu
Li Shufu, chairman of Geely Automobile Holdings Ltd. Photographer: Tomohiro Ohsumi/Bloomberg

Bring it on. That’s the message Li Shufu, the Chinese billionaire chairman of Volvo Cars, wants the government to give competitors in the largest auto market.

“It’s best if it’s completely open, like in the U.S. and Europe; whoever wants to produce cars can do it,” Li, who’s also chairman of carmaker Geely Automobile Holdings Ltd., said in an interview. “This is fair to us, it’s fair to everyone. It would completely allow the role of the market and perhaps we will develop better.”

Li, set to unveil the first new Volvo developed jointly with Geely Aug. 26, has previously called on the government to give foreign carmakers more control over their operations to quicken competition and bring down prices. The China Automotive Technology and Research Center, which helps draft policies, said in June it is proposing two to three electric-vehicle making licenses for companies other than carmakers.

In the market for conventional vehicles, Li, 51, has also pushed for easing regulations.

China requires carmakers based outside the country to work with local partners and enforces rules that limit the companies’ decision making. Geely, whose sales fell 29 percent by volume in the first half to 187,186 units, is trying to boost sales by reducing the number of brands it sells.

The government has said the country’s auto industry, with about 110 competing brands, should consolidate and it has threatened to cancel the permits of automakers that do not meet the minimum production levels by October next year of at least 1,000 passenger vehicles or 50 medium to heavy trucks, depending on their category.

Lacking Competitiveness

China’s industry minister Miao Wei said in March local automakers aren’t competitive enough and lack the capability to expand overseas. He said the government isn’t working on plans to lift the 50 percent limit on foreign ownership of carmakers.

Li said in an interview last month in Hangzhou, China, that he welcomes entrepreneurs from information technology and other industries to enter the carmaking industry.

“The country shouldn’t impose thresholds. But the country should have standards. It should use the law. Whoever manufactures the product must bear responsibility for the products,” he said. “Whether the threshold is scientific or fair, that’s important. At least, I think, China’s automobile industry’s threshold now has room for adjustment.”

Geely was the first private automaker in China when it started 17 years ago. The company paid Ford Motor Co. about $1.8 billion for Volvo Cars in 2010.

Chinese brands’ passenger vehicle market share in the first six months of this year fell to 38 percent, a 3.5 percentage point drop from the same period last year, according to data from the China Association of Automobile Manufacturers.

China’s state-backed auto association estimates the vehicle deliveries will rise 8.3 percent this year.

(Volvo’s acquisition value was corrected in a previous version of this story.)

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