China eases restrictions on foreign carmakers

Foreign companies will soon be allowed to have full ownership over their car manufacturing operations in China, thanks to eased regulations.

From January 1, carmakers will no longer need to enter a 70:30 joint venture with a Chinese company – a requirement since 1994, which were eased from a ratio of 50:50 in 2018.

The country’s top economic ministry regularly releases a document outlining the industries which are barred from outright foreign ownership, but the latest release has dropped the automotive sector from its list.

Forcing manufacturers to join up with local car companies meant more profits were kept from exiting the country – with five of the largest local manufacturers being state-owned.

The regulation has also allowed Chinese carmakers to rapidly close the gap with the world’s leading manufacturers, with access to best-practice design and manufacturing techniques.

It’s expected the rule change will make it easier for start-ups such as Lucid and Rivian to enter the Chinese market.