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China Lifts Motorcycle, Battery Investment Limits in Key Policy

July 19, 2016
Manufacturers previously were required to partner with local companies and could own as much as 50% of joint ventures.

China’s central government said it’ll exempt foreign makers of motorcycles and batteries from ownership limits in their manufacturing operations, revising a key industrial policy just as rulemakers consider similar measures for car companies.

The amended rules governing foreign investment will apply to foreign companies setting up in the free trade zones of Shanghai, Tianjin, Guangdong and Fujian, the central government said in a statement Tuesday. Manufacturers previously were required to partner with local companies and could own as much as 50% of joint ventures.

The rule change is a trial for the motorcycle and battery industries as China’s government considers removing caps on stakes foreign carmakers can own in joint ventures with local partners, introduced in 1994 to ensure local automakers benefit from technology transfer. The policy has been criticized in recent years for shielding state-owned companies from competition and reducing the drive to build their own brands.

Xu Shaoshi, chairman of the National Development and Reform Commission, said in June the government is looking into lifting the 50% cap.

The free trade zones could benefit Samsung SDI Co. and Panasonic Corp., as battery makers will be allowed to set up solely owned companies and produce batteries that meet certain performance thresholds, according to the statement.

China will make timely revisions to the regulation based on the trial operations that follow the announced amendments, the central government said in the statement.

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