New "Oceanization Movement" for Auto Brands
Long Yongtu, the Secretary-General of the Boao Forum for Asia, found himself unexpectedly caught in the middle of a heated debate about China’s auto industry. His controversial remarks on "not owning a brand for your own" sparked widespread discussion, and he eventually took a clear stance at the 2005 Guangzhou Auto Development Forum, stating, “Market-for-technology is now the time.†This time, rather than refuting directly, even Chery’s president Yin Tongyao showed some level of agreement. The reason behind this shift lies in the latest developments in self-development efforts and the National Development and Reform Commission's push for joint ventures to create their own branded automotive products.
The question of whether joint ventures are like "smoking opium" has long been a topic of debate. Long Yongtu, who played a key role in China’s WTO accession negotiations, recalled how he once fought hard to protect the domestic auto industry. He emphasized that China has never had a bad outcome when it comes to foreign affairs, and he remains confident in the country’s ability to manage its economic strategy.
After the Sixteenth Central Committee of the Communist Party elevated "independent innovation" to a national strategic level, concerns arose that the joint venture-driven "Westernization Movement" might be slowing down. However, Shao Qihui, Honorary Chairman of the China Society of Automotive Engineers, warned against one-sided interpretations of the policy, arguing that such views could harm the normal development of enterprises.
The rise of joint ventures in the 1980s, with companies like Beijing Jeep and Shanghai Volkswagen, marked the beginning of the Westernization of China’s auto industry. But criticism of these partnerships has never ceased. Li Shufu of Geely famously called joint ventures "like smoking opium," highlighting the risk of over-dependence on foreign technology without proper absorption.
Experts like Guo Konghui have echoed this concern, pointing out that many joint ventures rely heavily on external technology without developing internal capabilities. Industry data shows that Chinese firms spend 1 yuan on technology introduction but only 0.078 yuan on digestion and absorption—far below the 1:5 to 1:8 ratio seen in Japan and South Korea.
Lu Zhifeng of GAC noted that without production and capital accumulation, R&D capabilities cannot be developed. Zhan Qinghong of Guangzhou Honda admitted that independent R&D is costly and risky, requiring large-scale sales to justify the investment. Even Chery’s Yin Tongyao supports joint ventures, acknowledging the value they bring in parts, talent, and infrastructure.
At Shanghai Volkswagen, the design team draws inspiration from Chinese culture, incorporating local elements into global models. While foreign engineers still dominate, the Chinese side is increasingly involved in adapting vehicles for the local market. Guangben aims to develop a new Chinese version of a car that other markets will then adopt, potentially earning technology transfer fees.
Many joint ventures are moving toward independent development. Hainan Mazda is working on a new A-class car, and FAW-Volkswagen plans to launch independently developed products. SAIC’s Hu Maoyuan believes joint ventures can build China’s own brands, a view Long Yongtu supports.
Shao Qihui criticized the overemphasis on complete independence, warning that it could hinder globalization and economic progress. He argued that openness and collaboration are more effective than isolation.
While the "market-for-technology" strategy has faced criticism, Long Yongtu believes that as China opens up further, technology exchange will become more natural. With multinational companies setting up R&D centers in China, the focus is shifting from mere market access to deeper technological cooperation.
In the end, the success of this model depends not just on policy, but on competition and market forces. As the auto industry evolves, joint ventures are finding new ways to innovate, balancing foreign expertise with local development.
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