On the morning of March 3rd, Li Shufu, member of the National Committee of the Chinese People's Political Consultative Conference and chairman of Geely Automobile Holding Group, exchanged ideas with the media on the proposals brought about by this session of the CPPCC. When discussing the proposal on reforming the taxi market supervision system to establish an open and fair market competition order, Li Shufu pointed out that the current taxi purchases in Beijing and Shanghai tend to be local joint venture brands, without considering the local brands first. The underlying reason is that Maintain a 50:50 auto joint venture model for many years.
"Because of the current 50:50 stock structure, China's capital will speak for the joint venture company. The government said that we have to put locally-produced taxis because local companies have 50% of the shares. This is under the banner of the local company. The interests of local local companies provide services for foreign companies," said Li Shufu. In his view, if you liberalize the equity ratio limit, local companies and foreign companies have no relationship, then rental procurement will exclude the interests of foreign companies first, leaving only local companies to compete with each other.
"I support the 50:50 stock ratio release. Foreign brands are foreign brands, Chinese brands are Chinese brands, not Chinese companies want to partner with foreign companies." Li Shufu said.
Li Shufu believes that although China currently has a 50% profit from the joint venture model, it is essentially obtained by harming the interests of consumers and harming the country’s competitiveness. "Chinese car prices, no matter which joint venture brand, are much higher than the price of Europe, the United States, Japan and South Korea, and the result of this joint venture is to increase the cost of consumption for Chinese car users." Li Shufu said.
"To calculate the general ledger, don't count how much the car companies divided up. How much does the Chinese people divide up? How much does the country divide up? Is China's car cheaper than the United States, Europe, Japan, and South Korea? If prices are high, it means that It did not bring benefits to the Chinese people," said Li Shufu.
Concerns over the release of shares of many auto group leaders will threaten the survival of independent brands. Li Shufu said that laws and policies cannot be formulated to protect the vested interests of several auto companies nowadays, and advances, reforms, and opening up should be encouraged. It can't be simply from the perspective of the interests of the Chinese auto companies, but from the interests of the entire country and the interests of consumers.
"We must open up the equity ratio and use market methods to truly create competition between Chinese companies and foreign companies, rather than foreign companies and state-owned enterprises that hold up groups to compete with the people and compete with users," said Li Shufu. "State-owned enterprises should cooperate with private enterprises to compete with foreign companies instead of cooperating with foreign companies and competing with private enterprises."
For the joint venture company executive vice president and secretary-general Dong Yang of the China Association of Automobile Manufacturers who had thrown out the “Treasury†theory, Li Shufu answered with a faint response: “They are patriots. Is Geely a traitor?â€
Since the beginning of this year, related discussions on automobile joint ventures have become more heated than ever. The four major state-owned groups of FAW, Dongfeng, Chang’an, and GAC are in charge of opposing each other’s openness. As a small number of support stocks, compared with open auto operators, Li Shufu’s views are particularly eye-catching. Before the introduction of the new version of the automobile industry policy, the debate on the equity ratio may continue for some time.
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