Commerce Minister Bo Xilai yesterday named eight cities as China's first batch of automobile export zones.

China's Commerce Minister Bo Xilai speaks to the media during a press conference in Beijing Monday, May 30, 2005. [AP]

At a ceremony in Beijing attended by Vice-Premier Wu Yi, Shanghai, Tianjin and Chongqing municipalities, as well as Changchun in Jilin Province, Wuhan in Hubei Province, Xiamen in Fujian Province, Wuhu in Anhui Province, and Taizhou in Zhejiang Province were named as the first eight zones.

The ministry and the National Development and Reform Commission also named 160 vehicle and spare parts manufacturers from these cities as the first batch of national automobile and spare parts exporting enterprises.

Among these firms, 61 are foreign-funded companies, according to the ministry.

The long-awaited move comes amid the rapid growth of China's exports of vehicles and spare parts.

However, the industry's export volume remains small and domestic companies have been engaged in bitter overseas price wars.

Bo said that industry regulators would soon issue measures to help boost the nation's vehicle and spare part exports, and put the market in order.

"Expanding the exports of vehicles and spare parts, especially our own brands and those with our own intellectual property rights, is the only way to enhance our auto industry's international competitiveness and enable China to turn from a major auto-making nation into a strong one," Bo said.

The auto sector should fully utilize markets and resources at home and abroad, and domestic manufacturers should become internationally competitive, he added.

China's vehicle and spare parts exports were worth US$10.9 billion last year, up 34 per cent from 2004.

In addition, the nation's vehicle exports more than doubled to 173,000 units in 2005, surpassing vehicle imports for the first time.

However, vehicle and spare part exports only accounted for 7.3 per cent of total output value of China's auto sector. In contrast, more than 40 per cent of vehicles made in Germany, Japan and South Korea are exported.

China is currently the world's fourth-biggest auto-making nation after the United States, Japan and Germany. It produced 5.71 million vehicles last year and output is expected to reach 7 million this year. Meanwhile, the nation has more than 5,800 vehicle and spare parts manufacturers.

Bo said China's vehicle and spare part exporters face major risks due to a host of problems, such as domestic producers' weak independent development capabilities, stricter foreign environmental and safety standards, and a lack of shipping capacity. Domestic automakers mainly sell buses, trucks and low-end cars in overseas markets.

Also yesterday, 17 of the automakers named by the minister agreed to form 15-year strategic alliances with China Ocean Shipping Group and China Export & Credit Insurance Corp to expand their shipping capacity and avoid export credit risks.

Zhu Yanfeng, general manager of First Automotive Works Corp (FAW), a partner of Volkswagen and Toyota, said the company would step up its efforts to improve its independent development capabilities and branch out into overseas markets.

"We will extend sales networks, improve services and focus on our own-brand vehicles in the overseas market to build up a new global image for Chinese-made vehicles," Zhu said.

He stressed that Changhcun-based FAW would also respect intellectual property rights.

FAW's own-brand line-up includes trucks, buses, mini vans and cars.

(China Daily 08/18/2006 page9)