Automobile Industry “New Dealâ€: No More Approval of Specific Investment Projects
In a recent session of the 2004 China Auto Parts Business Forum, held in Shenzhen from May 28 to 29, officials from the National Development and Reform Commission (NDRC) provided insights into the upcoming "New Deal" for China's automobile industry. Organized by the China Federation of Automobile Manufacturers, Shenzhen Municipal Bureau of Trade and Industry, and Shenzhen Enterprise Federation, the event brought together leading experts, domestic and international auto manufacturers, and industry stakeholders to discuss the future of China’s auto sector.
Experts emphasized that the growth of China’s automotive industry depends heavily on strengthening its parts and components manufacturing capabilities through strategic cooperation. Shenzhen, with its strong industrial base and expertise in automotive electronics, is well-positioned to benefit from the global shift in auto parts production. The city should leverage its proximity to Guangzhou and accelerate the development of its auto parts industry to boost the broader industrial economy.
Looking ahead, the forum highlighted the challenges and opportunities facing China’s auto industry as it enters a new phase after joining the WTO. With reduced tariffs and open import quotas, the industry must prepare for heightened global competition. Experts stressed the need for China to enhance its independent R&D capabilities, develop strong domestic brands, and integrate into the global supply chain.
At the event, Li Gang, Director of the Ministry of Industry and Transportation under the NDRC, revealed key elements of the new national auto policy. The policy promotes diversified investment, including support for private enterprises, and aims to create a fairer environment for all players. It also focuses on strengthening the development of independent brands and improving sales systems.
The policy addresses three major issues: equal treatment for all industry participants, revised investment management methods, and improved access standards. While some sectors will still require government approval, the overall trend is toward more flexible and transparent regulations. The policy also emphasizes the importance of self-research and development, aiming to shift focus from protecting production to supporting innovation.
Another key aspect of the policy involves managing the import of auto parts, particularly limiting the production of SKD (Semi-Knocked Down) units. Distributors must now obtain licenses from manufacturers, and the sale of domestic cars is subject to stricter controls to prevent overdevelopment by foreign companies. Domestic enterprises are also expected to maintain significant equity shares in joint ventures.
In addition to these regulatory changes, the forum addressed the growing challenges in auto parts procurement. Experts pointed out that building a reliable and efficient supply chain is essential for competitiveness. Suppliers that can develop products in sync with vehicle manufacturers help shorten development cycles and speed up product launches. Effective procurement systems not only reduce costs but also ensure long-term success in a highly competitive market.
Companies like Dongfeng are investing in standardized and internationally aligned procurement systems to improve efficiency and foster collaboration with suppliers. As the Chinese auto industry continues to evolve, the role of procurement and supply chain management will become even more critical in driving sustainable growth and global competitiveness.
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