The
Chinese government has informed Fuji Heavy Industries Ltd that it will not
approve the automaker's application in May to set up a joint venture with a
Chinese company, sources said Friday.
Observers suspect that China's growing concern
regarding overproduction of cars amid its economic slowdown is behind the
latest move. To avert the problem, the Chinese government intends to expedite
introduction of state-of-the-art technologies, such as hybrid cars and electric
vehicles, they said.
As a reason for the decision, the Chinese
government cited the rule that limits the number of joint ventures foreign
automakers are allowed to set up in China to two.
Fuji Heavy Industries itself has not
established any joint venture in the country. But China's National Development
and Reform Commission reportedly told the automaker in September that it will
not approve the automaker's application because it is an affiliate of Toyota
Motor Corp., which already has two joint ventures in China. Toyota has a 16.5
per cent stake in Fuji Heavy Industries.
Fuji Heavy Industries planned to establish a
joint venture in Dalian with Chery Automobile Co., a midsize Chinese automaker,
hoping to make its business in China, the world's largest car market, the
pillar of its profits.
Fuji had aimed to increase annual production
through the venture to 150,000 in fiscal 2015, according to the sources.
Car production in China stood at 18.26 million
in 2010. However, the country's new car sales showed modest single-digit growth
for three consecutive months to August. In addition, competition between
Chinese automakers and foreign rivals is intensifying.
Against this background, some observers
suspect the Chinese government will attempt to urge the Japanese automaker to
transfer its cutting-edge technologies, such as that for electric cars, using
the joint venture plan as a bargaining chip.
For its part, Fuji Heavy Industries is set to
continue asserting to the Chinese side that although Toyota is the automaker's
largest shareholder, it is not controlled by Toyota.
In China, there are also concerns that prices
of liquid crystal panels may plunge due to domestic overproduction. This
apparently prompted the Chinese government to ask Sharp Corp in February to
build a plant for state-of-the-art products, instead of its original plan to
build a plant for mass-produced items.
According to a Japanese government source
familiar with international trade, the Chinese government is intensifying moves
to introduce cutting-edge technologies into the country for differentiation.
"Similar steps may also be taken in the
electronics, precision instrument and material industries," the source
said.
In addition, rising personnel costs in China
are prompting Japanese and other foreign companies to relocate some of their
production bases in the country to Southeast Asian countries.
Some observers believe the latest case
indicates that Japanese firms' entry into the Chinese market is at a
crossroads.
Business Desk
The Yomiuri Shimbun
Business & Investment Opportunities
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