China Displays The Might of Its Purchasing Power

Saturday 18 September 2010, 00:00 AM by Payal Pathak

China had surpassed the US market in sales in 2009 to become world’s largest auto market. Now the country is flaunting its mighty purchasing power as the Chinese Ministry of Industry and Information Technology has proposed a new plan for the auto makers. As per the new norms coming into effect soon in China, auto makers in China will have to share their electric and hybrid vehicle technology with Chinese auto makers.

Apart from this, any foreign auto maker will be required to form a joint venture with any Chinese Auto Company before setting up any electric vehicle manufacturing unit for vehicles or for components. The Chinese counterpart will hold 51 percent share or the controlling stake in the joint venture while the foreign auto maker will hold the rest 49 percent.

Any auto maker refusing to comply with the norms will be banned from selling vehicles in China which is the world’s largest auto market now. The new norms come from the Chinese government as its strategy to become world leader in “green technology” to build future cars.

The proposed plan is "tantamount to China strong-arming foreign auto makers to give up battery, electric-motor, and control technology in exchange for market access," stated a senior executive at a foreign car maker to The Wall Street Journal. "We don't like it," he added.

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