48 Chinese carmakers set for chop amid industry shakeup
November 8, 2013 Leave a comment
48 Chinese carmakers set for chop amid industry shakeup
Staff Reporter
2013-11-07
China’s Ministry of Industry and Information Technology (MIIT) recently released a list naming 48 Chinese carmakers for their poor performance with an aim to reduce the number of car manufacturers in the country, reports the Chinese-language China Business Journal. The companies whose names were cited still have a chance to continue operating as long as they can pass an evaluation by October 31, 2015, a source told the paper.“The MIIT will now give these firms a chance of staying in business and it is up to them whether they can still exist after two years’ time,” said industry analyst Jia Xinguang.
The ministry listed car producers that had not manufactured or sold any or only a limited number of vehicles over a period of two consecutive years. But whether the measures can usher in change in the chaotic industry or lead to mergers and acquisitions within the sector remains uncertain.
Among the 48 car firms named, Jilin Tongtian Automobile, Yunnan Midea Auto and a subsidiary of Dalian Shide Group are relatively well-known firms, the paper said. China’s car industry has developed rapidly since the government mapped out a plan to stimulate the sector, while the production and sales volume has been topping the global market for several years, and technological advances have successfully helped industrial restructuring and upgrading.
There are more than 1,300 car manufacturers operating in China. In order to improve the core competitiveness of the automobile industry, the government has established a mechanism to eliminate failing manufacturers.
In 2006, the National Development and Reform Commission cancelled the operating licenses of around 120 companies as many of them had already ceased their operations. But Jia said that even if the 48 listed firms are eliminated within the next two years, the total number will still be too high. He added that the large number of firms is a result of the government approving too many licenses for vehicle production.
As the domestic automobile industry also faces the issue of excess supply, it will be increasingly difficult for many small and medium businesses to survive. The 48 firms will likely have to merge with larger companies to stay afloat, the paper said.
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