China Investment Roadmap: the Automotive Parts Industry - Preview

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These are exciting times for the automotive
industry in China. The country recently overtook
the United States to become the world’s largest
car market and shows no signs of slowing down.
As more and more Chinese enter the middle class,
their demands for mobility increases. As a result,
car use in China has exploded.
In its wake we find the
industry that makes the
wheels spin: the automotive
parts industry. Attracted by
the rapid demand for cars,
thousands of automotive
par ts companies have
sprung up across China,
resulting in the highly
fragmented sector we find
today. Up until recently,
car makers were able to
exert pressure on parts
manufacturers, drawing the attention of China’s
anti-trust regulators. Following a host of harsh
fines and penalties meted out to the major car
makers, auto parts manufacturers are now able
to sell directly to repair shops and consumers – a
move that enhances their price setting capability.
In this issue of China Briefing, we present a roadmap
for investing in China’s automotive industry. We
begin by providing an overview of the industry,
and then take a comprehensive look at key foreign
investment considerations, including investment
restrictions, tax incentives
a n d m a n u f a c t u r i n g
requirements. Finally, we
discuss foreign investment
opportunities in a part of
the industry that receives
substantial government
s u p p o r t : n ew e n e r g y
vehicles.
W i t h o u r s p e c i a l i z e d
knowledge and experience
i n Ch i na’s au t omo t i ve
industry, Dezan Shira & Associates can help
foreign companies either establish or expand their
operations in China and beyond.
This Month’s Cover Art
Radiance by 谢乐柔
Watercolor
Wan Fung Art Gallery
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Introduction