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Car makers gear up for a tougher China market

(Agencies) Updated: 2012-04-23 16:26

Foreigners welcome?

Foreign auto makers also confront China's toughening regulatory environment. Beijing has removed autos from the government's list of "encouraged" industries, a step widely seen as a sign that China no longer actively promotes or encourages further direct investment in its auto sector from abroad.

Though details are still unavailable, China's central government also has moved to bar certain government agencies from buying foreign cars, potentially excluding global auto makers from a market that totals between 70 billion and 80 billion yuan ($11.1 billion to $12.7 billion).

Both moves contribute to the feeling that the policymaker's enthusiasm for foreign car makers is waning.

Joe Hinrichs, Ford Motor Co's president for Asia-Pacific and Africa, believes there is "still tremendous support" at provincial and municipality levels, "where a lot of the action really happens" in China.

But "where you might say there's been a little bit of a backing off, if you will, of the drive to grow the auto industry is at the Beijing level (among central government industrial policymakers)," he said.

It's not just foreigners who worry about competing, though. The prospect that China's once red-hot demand for vehicles could register single-digit growth rates for a second year in a row - the slowest back-to-back years since the market took off in the late 1990s - provides plenty for all to fret about.

Surviving is "a live-or-die matter" for Geely and other relatively inexperienced indigenous Chinese auto makers, said Geely's Li Shufu. But "it's also difficult for everyone, including foreign auto brands."

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