09-01-2007 China
has decided to license auto exports in 2007 to prevent domestic auto vehicle makers
getting into cutthroat competition and to weed out companies that cannot make
the grade. According
to the 2007 Catalogue for Export License Management, no company will be able to
export automobiles, full sets of auto spare parts or auto chassis without prior
export authorization. Automobiles
are a new item on China's export license management catalogue which covers products
like live poultry, farm produce and mineral and energy resources like coal and
crude oil. Licensing
of automobile exports will start on March 1. The
revision of the catalogue comes just days after the National Development and Reform
Commission, the top policy setter, raised the threshold for investment in new
auto projects to curb emerging overcapacity. The
country's production capacity reached 8 million units in July 2005, and is expected
to hit 10 million in 2007. But demand was only 71.5 percent of capacity in 2005.
Customs figures
show China's auto exports surged 120 percent from 78,000 units in 2004 to last
year's 173,000 units. This year, the figure is expected to top 300,000 with sedans
accounting for 90,000, more than double the figure from a year ago. A
problem China must face is that about 600 of the 1,025 firms that exported vehicles
-- whether they are manufacturers or trading agencies -- exported less than 10
units. A staggering 160 firms exported only one auto per year. In
introducing licensing, China hopes to weed out firms with minimal exports as well
as companies that fail to guarantee product quality or provide solid after-sale
service. Such firms will be prohibited from exporting automobiles to prevent further
damage to the reputation of the indigenous car industry. In
August, the Chinese government designated Changchun, Shanghai, Tianjin, Wuhan,
Chongqing, Xiamen, Wuhu and Taizhou as the sites of the country's major auto factories
and its major export production base. China-made
automobiles are mainly sold to emerging markets such as the Middle East, Latin
America and Russia. The goal of China's auto industry is to account for 10 percent
of the world's auto trade in 10 years, in other words to achieve export orders
worth more than 120 billion U.S. dollars.
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