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Features - 13 August 2014

Foreign Automakers Gain Market Share in China

A recent report revealed that domestic automakers in China are losing market share to foreign automakers at a steady rate that appears set to continue as multinational corporations set up manufacturing plants in China. With an increasing number of China's citizens gaining wealth, new car sales are soaring, and more affluent consumers are choosing global brands which are seen as being safer, more reliable and more luxurious than locally produced vehicles. Moreover, restrictions on the number of license plates issued each year in Shanghai, Beijing and Guangzhou has made choosing a car an important decision, and buyers appear to be prepared to spend more on a car when they receive their much sought-after, and often long-awaited, license plates.

Ford Motor set up a joint venture in Chongqing more than two years ago, and through expanding output and introducing new models, the company exceeded sales of 100,000 cars and light trucks in March, and revealed plans to double production in the coming year. China's automakers are mostly state-owned and are reportedly pressuring the country's Ministry of Commerce to extend the requirement that foreign automakers must have 50-50 joint ventures with domestic partners to assemble cars in China. Of its own volition, the Commerce Ministry had reportedly considered dropping this requirement in anticipation of China exporting large numbers of cars to industrialized nations, thereby circumventing protectionism issues. But, the state-owned automakers are more focused on capturing local market share, than exporting at this stage.

For decades the prices for automotive replacement parts have been an issue in the United States, as many brand name parts have no generic equivalents. The same problems apply to China. Moreover, car prices in China are generally higher than elsewhere, even before adding the 17% value-added tax and 25% import tax, as well as consumption tax which is based on engine displacement and can be as high as 40% of the sales price. Despite these price variances foreign cars continue to garner increased market share in China.


China and Cuba Discuss Trade and Investment - 23 July 2014

As the last stop on his four-country Latin American tour, Chinese President Xi Jinping met with Cuban President Raúl Castro to discuss, among other things, increasing bilateral trade and investment. President Xi was greeted with military honors at Cuba's Palace of the Revolution, the venue for talks between the two leaders. As the only single-party communist state in the Americas, Cuba started opening up its economy in 2008 with limited success, but observers note that Cuba appears to be following in China's footsteps with regard to economic and trade reforms, which lays a foundation for increased cooperation between the two countries.


Swiss-China FTA Set to Increase Trade - 9 July 2014

The Free Trade Agreement signed by Swiss Federal Councilor Johann Schneider-Ammann and Chinese Minister of Commerce Gao Hucheng on July 6, 2013, came into effect on July 8, 2014, making Switzerland the first mainland European country to enter into such an agreement with China. The deal came about as a result of two years of negotiations between Bern and Beijing and is designed to cut through excessive red tape and regulate import and export tariffs, with a view to, among other factors, Switzerland gaining access to the sizable Chinese consumer market and China gaining the benefit of Swiss technological innovations.