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Discussion Starter · #1 ·
Greetings!

I'm completely new to the Chinese Auto industries, since Chinese made cars aren't sold in Hong Kong and US.

I know China is run by the communist party, but since the economic reform in 1987, many private companies have been setup. Before then, all enterprises weren't owned by the Chinese government.

Let's take Chery for an example, according to wikipedia, it's State-owned. As for Great Wall Motor, it says "Public". I assume it means that it's a publicly-traded company. So, does the government has any ownership in Great Wall Motor? And for Chery, does the government make any decision for the company?


Thanks
 

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Welcome HKuser,
You ask a difficult question.
I don't know much about it but hopefully others who are more knowledgeable will be moved to correct my errors.
In general we can say that most Chinese auto manufacturers are state-owned. But right away we have to qualify that by saying that most of those are under provincial government and/or municipal government control. And yet the central government is not without its say. In fact at present it is putting a lot of pressure on automakers to merge their companies for an industry consolidation. An example is the recent merger (or maybe we can say acquisition) of Nanjing Auto by Shanghai Auto.

As for private enterprises, Great Wall, Geely and BYD are the ones that are best known. Lifan is state-owned in part, and yet AIG bought and owns 13.5%. Chery has been talking about an IPO for awhile now, and although that hasn't happened yet, just the other day it was reported that it sold a 20% stake to two so called private equity investors (companies).

Most of the management of these manufacturers are Communist party members including Geely's founder.

The PLA once had a big hand in running the manufacturers since most grew out of military ordinance units of one kind or another. But after the central government cracked down on their abuses things got better. And until recently the central government has been pretty good I think at allowing many small manufacturers to do their own thing. Kind of a laissez faire attitude as the economy transitioned from command to market type.

Hope this helps.
 

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That's the problem, most of the people out there are not aware of the chinese products and services. There are certain areas where chinese quality can out pass all the competitors. But yet the customers are not aware of them.
 

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the ironic thing is that america has one thing in common with china

Government-owned and Public car companies!!!

GM is 70% owned by the govt./taxpayer and controlled by the PTFOA

let's see if who can make the crappiest car
 

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Discussion Starter · #6 ·
Hmm... GM is a private company. Only recently after the bankruptcy has the government invested into the company in order to help build a new and better GM. Obama has insisted that the government will not run the company.

Some of the cars from GM are crap compared to other modern cars from Japan or domestic in terms of handling, build quality, etc. But at least they are safe, which is the most important.
 

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In the case of GM, it's currently the USA central government that makes the final approval of all major decisions. I can't think of a single Chinese car maker in the same position.

Essentially all Chinese car makers are operating under World Trade Organisation rules and so it doesn't really matter where the investment money came from, they should still be operating within the international economy on an equal footing to any non-Chinese car maker. There is a general push to remove government investment but that seems to make slow progress as the provincial governments are keen to encourage development within their own areas and are allowed to invest within WTO rules. The WTO does allow some concessions to its normal rules in order to allow the Chinese economy to "catch up" with the more developed economies, but that will not last for much longer.

As you pointed out, the fact that the country is run by a party called the "Communist Party" is fairly irrelevant as they operate a capitalist economy very similar to most other developed countries, the only significant difference is the way in their people elect their leaders.

The parent company of SAIC for example is government owned, however it has several subsiduaries that make cars, some are joint ventures with foreign automakers but their own brand cars are made by a subsiduary that is a listed company and has the same name as the parent - all very confusing!
 

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IMO, the big difference isn't really how business is done - business is business is business - a product is designed, manufactured and sold and if the consumer likes that product, the product is successful. That is true in China as well as most other places in the world today. The BIG difference is HOW THE DECISIONS ARE MADE. Let's take one example - cleaner air regulations in America. How many years has various types of legislation gone thru Congress? Even if Congress agrees on something, the state governments stand up and scream (California actually passed tougher standards than the federal government did - which meant car companies had to make a "California only" model)........THEN the lawyers have at it. See where I'm heading here? Sometimes things can take YEARS to get done in America........now let's look at China. Recently the government here decided to provide incentives to consumers to encourage them to buy small cars, by lowering the sales tax on cars with engines with 1.5l or smaller (down to 3% now from 5%) or even lower on engines with engines of 1.0l or less (down to 1% now from 5%). Guess what? It was done - no vetoes, no lobbyists, no media backlash.........it was simply done. Same with alternate energy technology, consolidation of the auto industry by encouraging smaller companies to merge or phase themselves out, etc. - so in this case active government intervention has allowed the industry to move forward more quickly and efficiently. Would this work in other countries (i.e. countries with a different form of government)? Probably not..........but ALSO keep in mind that the chinese auto industry is young, it has grown VERY quickly and was somewhat disorganized (think of the personal computer revolution in the 1980's - lots of small companies starting up to grab a piece of the pie but not much organization in place to make it all work) - it NEEDED (and still needs) direction to get it all "on track". It's hard to believe, but auto companies like Chery and Geely have been around less than TEN YEARS - Brilliance and BYD even less than that. Yet, these are the "big boys" in the homegrown car scene - China is still a young market! There are SO many other things the auto industry is just developing here - aftermarket and accessory shops, the used auto industry (growing BIG TIME here), MUCH more infrastructure (streets/highways/gas stations), repair shops, driving schools, on and on - and this is ALL HAPPENING AT THE SAME TIME. Trust me, there NEEDS to be some government control to keep all of these sub-industries from stepping on each other and NOT disrupting the retail market as well!

My point with all this rambling? Yes, the government here makes some decisions for the industry - things like approval for purchasing foreign companies (like the recent purchase of Volvo by Geely), approving IPO's, things like that. Are there government overseers in the design rooms as they are creating new models? I seriously doubt it. The auto industry is a piece of the economic pie for China - but just a piece. Think of the challenge the government has here - to control the growth and modernization of their entire country in the space of 20 years that took America 100 years to do the same thing. America's infrastructure and economy had time to grow and mature in a more natural way - that's not possible here in China. I still remember seeing my first Geely 6 years ago and just laughed...............and when I saw the new Geely Panda recently I STILL laughed - but in amazement, not pity for what Geely has accomplished in just SIX years. Should we give the government credit for this? No, I give Geely's designers credit - but I cannot ignore the fact that government involvement allowed the auto industry to grow up quicker as well.
 

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That's the problem, most of the people out there are not aware of the chinese products and services. There are certain areas where chinese quality can out pass all the competitors. But yet the customers are not aware of them.

I agree. Most of the consumers/customers are not aware of these chinese products. Some of their products are not branded not is it not expensive, but the quality is amazing and that's what matters.
 

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Just look at the airline industry here all SOE's the only one who is ONLY half owned is Hainan airlines which is the BEST in china as far as service goes.
Look at all the cigerrete companies here, all SOE's.
Petrol stations, ALL SOE's except for BP.
Same with all the car companies here they are all SOE's or 'joint venture'.
My wife deals alot with the domestic companies and frowns upon their views and ways.
 
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