Trade relationship between China and US are not at best and despite this Ford is welcoming new decision of Chinese government to remove ownership limits
China is world’s largest car market and manufactures are introducing Chinese specific models to increase their footprint in the country. Finally the Chinese government has decided to remove foreign ownership limitation for car makers.
The government announced in 1994 that foreign manufacturers couldn’t own more than 50% of share in their joint ventures. Even though this has resulted in some interesting partnerships and most of them have worked well for foreign automakers to make their market in the country.
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The government removed ownerships limits for electric and hybrid manufacturers this year and followed up with commercial manufacturer by 2020. The wide body car manufacturer will have to wait until 2022 to be free from the current limits. But most of the manufacturers who have joint ventures with local vendors have said that they won’t be scraping their deal with them as it helped them to crack world’s largest car market.
The new decision will also increase pressure for domestic manufacturer as the competition is going to heat up even more. The new law will help Chinese government to increase investments to the country. The pollution is also increasing in China at an alarming rate so the government is giving more importance for electric and hybrid vehicles.
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In recent years, so many electric start ups have come up in China and home manufacturers like Geely are under huge pressure to develop EVs which is why the new partnership between Volvo and Mercedes is going to be very important. Tesla which is the most popular electric car maker was planning to build a new manufacturing plant in Beijing and this new decision will certainly boost their proposal.
The trade relationship between China and US are not at their best and Ford is worried about this but they welcome the new decision of Chinese government to remove ownership limits. Chinese government is also planning to lower import taxes. This will certainly help premium car manufacturer as with current taxes, they are priced high and it will make these models more accessible.
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