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Changan Automobile Co Ltd, one of China's largest State-owned automakers, is poised to make a historic breakthrough by having one of its joint ventures both producing and selling Chinese-branded cars at home and abroad.
The Chongqing-based carmaker and the French automaker PSA Peugeot Citroen established their joint venture in 2011 in Shenzhen, called Changan PSA Automobiles Co Ltd, to accelerate the State-owned auto manufacture's internationalization process.
"Within the next three years, Changan cars produced by our joint venture with PSA will be sold in China and overseas," said Ren Qiang, Changan's vice-president.
"As China's largest national brand auto producer, Changan is now realizing this unprecedented success in joint-venture enterprise operation," Ren said.
Since the 1980s, various automotive joint ventures have been set up in China. International carmakers have shared their manufacturing technology and know-how with Chinese State-owned partners to gain a foothold in the market.
Shanghai's SAIC Motor Corp Ltd operates 104 joint ventures, including two of the biggest with Volkswagen and General Motors.
Changan has also set up joint ventures with Mazda, Ford and Suzuki.
Joint ventures have been selling foreign or joint-branded cars in the Chinese market with the Chinese companies having little say on the marketing strategy, Ren said.
China is now the world's biggest car market with international brands gaining huge popularity and joint ventures dominating the market.
In 2011, 95 percent of total profits generated by all auto enterprises in China were from joint enterprises, and independent firms accounted for just 5 percent, according to a report released by Chinese Academy of Social Sciences last month.
"Until now, none of the automobile joint ventures in China had ever introduced independent Chinese brands onto the market," said Jiang Aiqun, a spokesman at Changan, adding that with this breakthrough, the company has now achieved the business model of a true multinational group.
Although already a major auto producing and consuming country, China's independent-branded auto companies are still at the lower end of the global industry, the Chinese Academy of Social Sciences report concluded.
In a market investigation conducted by PSA in South America last year, unmarked Changan vehicles gained the same satisfaction reading as unmarked PSA products among local consumers, and Jiang said that was the main reason for the decision by both sides to launch Changan autos produced by CAPSA, in the Chinese market.
The French company has been low-key about its plans to introduce Chinese-branded cars from the joint venture because the move is so unusual, according to a worker at Changan.
Chinese automakers are seeking various opportunities to increase market share for their own brands, in their fight against foreign counterparts.
Companies including SAIC, FAW Group and Changan all plan to introduce middle- and high-end vehicles, an sector of the market now dominated by foreign brands.
Overseas expansion is also one of their strategies.
"By 2020, we plan to increase overseas sales of Changan autos to 25 percent of the brand's total sales volume," said Ren.
In 2012, more than 1 million Chinese-branded cars were exported mainly by five leading companies: Chery Automobile Co Ltd, Geely Automobile Holdings Ltd, Great Wall Motors, GMAC-SAIC Automotive Finance Company Ltd, and Lifan Group, according to data from China Association of Automobile Manufacturers.
Although still in its infancy, the Chinese automotive industry is now expected to step up its overseas expansion.
From January to April, Changan registered 710,000 sales in total, a 23 percent year-on-year increase, and 10 percent higher than the industry average.
Its independent brand sales reached 321,000, ranking it top among China's brands.
"Having already started selling in Brazil, Changan's next step is to establish component and processing joint factories overseas," said Ren.
(China Daily 06/14/2013 page15)