China Carmakers May Be 'Destroyed' If Foreign Venture Cap Lifted
- China reviewing 50% foreign ownership limit on joint ventures
- Foreign automakers stand to reap billions more in profit
Aerial View of Audi cars in FAW-Volkswagen Changchun plant parking lot.
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Chinese state-owned auto giants such as SAIC Motor Corp. and Dongfeng Motor Group Co. may see billions of dollars in profits evaporate if the government lifts protectionist measures and lets foreign companies operate without a local partner.
China requires overseas carmakers such as General Motors Co., Toyota Motor Corp. and Volkswagen AG to form joint ventures with locals in order to sell their brands in the world’s biggest market. The policy enacted two decades ago capped foreign investment at 50 percent, helping local brands develop manufacturing expertise while still profiting from sales of foreign marques.