More restrictions on foreign investment in auto industry: proposal at 2 sessions

An insider of FAW-Volkswagen Automobile Co. Ltd., the joint venture between FAW Group Corporation and Volkswagen AG in China, revealed that some domestic car makers hope foreign investment could be integrated in the auto industry.

A proposal on strengthening restriction and management to foreign companies in China's automotive industry was rendered by a Chinese automaker leader at the two sessions.

Li Weidou, general manager of China FAW Group Import & Export Corporation, suggested prohibition of foreign automakers' application for second joint venture.

He also mentioned that in order to prevent vicious and unfair competition, and to keep China's auto industry in plain order, the products and technologies shared by both sides should be clearly defined, and both automakers should only sign agreements under coordination of the government, SASAC (State-owned Assets Supervision and Administration Commission of the Sate Council) and the Auto Industry Association.

"Foreign companies usually threaten to transfer production resources of joint ventures to force their Chinese partners to sign contracts," said Li.

An auto analyst said the proposal isn't feasible because it runs counter to the spirit and principles of WTO. Besides, it's not easy to manage the conflict of interest among domestic automakers.