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Chinese car makers forced to merge

By Chris Anderson-Peters |

The Chinese government is set to reveal plans towards the end of this year to encourage mergers and acquisitions between China’s car makers. The idea is simple, through mergers and alliances stronger Chinese car companies will arise to increase the sector’s growth.

Last year the Chinese car market become the world’s largest, overtaking the United States for the first time in history.

Nonetheless only a handful of the 130 car makers in China have annual sales exceeding 10,000 units with China’s top 10 car makers making up 87 per cent of all sales.

European manufacturers have taken a strong presence in China to capitalise on the boom.

The Chinese government wants to prohibit car makers from building new plants unless they acquire an existing manufacturer first.

Beijing seeks to mimic European and American car makers by reducing the number of smaller car companies and focus on creating a couple of major car makers with production capacities exceeding two million units by 2012.

The restructuring is part of the government’s 2015 grand plan to be more globally competitive, with a fifth of Chinese car makers’ sales coming from exports.

Source: Autocar UK


 

About Chris Anderson-Peters

Christopher Anderson-Peters is a respected Journalist and PR professional who has worked across numerous media companies and organisations such as the Herald-Sun, The Weekly Times, The Age, Austereo Network and sports website Live4Sport. An avid automobile fanatic, Chris is excited to join the CarAdvice team.
  • Bezza

    I see the reasoning but generally in every case where govt interferes with business, tremendous inefficiency results. Will rolling all these manufacturers together create 3 slow and stogy organizations, where many smaller yet profitable companies could create innovation?

    I guess we’ll get to see.

    :-)

  • ohsotorque_

    In a democracy, when the Government interferes, that will increase inefficiency (ie. USA, India etc) because there are too many “other” factors that they can’t control.

    However in China, where the Government has large control over everything, order and direction is necessary.

    Just looking at the time period it took the USA to rise and compare it with China and you’ll notice a distinguishable contrast. It has take China considerably less time to achieve what many Western nations have taken decades and centuries to accomplish.

    This goes for the the ill-informed and naive supporters of India surpassing China in this century. China’s communism efficiency far surpasses that of Indian Democracy.

    Just take into account. To accomplish anything in a democratic nation takes a huge amount of time for any form of agreement to be reached from the ruling Party and the opposition. At the very least, whichever direction the Chinese leadership decides to pursue, they are united and have the full force of the nation, not fragmented and paralyzed like the US over so many issues; emergency economic stimulus, healthcare, war on terror etc etc.