Introduction to Foreign Investment in the Auto Industry

The automotive industry, which currently consists of many foreign-invested enterprises, is one of the industries in China that has opened itself up more and more to foreign investments in recent years.

Foreign investors formally entered China in 1983 when Beijing Jeep Automobile Co Ltd was established. Until the end of 1998, the number of foreign-funded enterprises in the automotive industry, through 20 years of development, totaled 466, with 102 vehicle enterprises, 350 auto-parts enterprises and 14 other enterprises for motor vehicle production.

The total value of foreign investments in the automotive industry totaled US$20.366 billion: US$11.040 billion for whole vehicles, US$9.004 billion for auto parts and US$321 million for producing other relevant motor vehicles.

Generally, foreign investors focus on regions with a concentration of motor vehicle enterprises and where the economy is more developed and prosperous. Shanghai's total value in foreign investments is over US$3 billion; Liaoning and Jilin provinces have between US$2-3 billion respectively; Hubei, Guangdong, Jiangsu and Shandong provinces and Beijing and Tianjin cities have between US$1-2 billion each, while Chongqing City and Heilongjiang and Hunan provinces each boast between US$0.5-1 billion in investments from abroad.

The world's 500 biggest corporations, including Germany's Volkswagen Auto Corporation and Robot-Botshi Corporation, US General Motors and Ford Motors, and Japan's Delf Auto System Corporations and Toyota Commercial Organization, all have invested in Shanghai to produce automobiles and parts.

In addition, foreign-invested joint ventures -- Volkswagen and FAW of Changchun, Citroen, France; Hubei's SAW, Japan's TAIC and Toyota, Guangzhou Auto Corporation and Honda of Japan -- also achieved great success in the domestic auto market.

The number of the foreign-funded projects in the automotive industry totaled 294 in 2001; the contractual value of foreign investment amounts to US$872.29 million -- an increase of 31.67 and 37.38 percent respectively over the previous year. In 2002, approved projects in the automotive industry numbered 537; the contractual value of foreign investment is US$1639.17 million -- a jump of 82.65 and 87.92 percent respectively over the previous year.