Joint venture model does not promote auto development

In recent months, a significant report titled *"Status and Countermeasures for the Independent Development of the Chinese Automobile Industry"*, commissioned by the Ministry of Science and Technology and released by Peking University’s Institute of Government and Enterprise, has sparked widespread discussion within China's automotive sector. This in-depth analysis traces the evolution of China’s auto industry over the past five decades, with a particular focus on the joint venture model that has dominated the market. The report concludes that this model has not effectively supported the independent growth of domestic automakers. Instead, it emphasizes that true survival and long-term success depend on building "independent intellectual property rights." According to the report, relying solely on foreign technology is unsustainable, but with the right government policies and strategic support, China’s auto industry can rapidly develop its own capabilities. The report comes at a critical time, as the number of intellectual property disputes in the automotive sector has risen sharply since China joined the WTO. With delays in new industry policy implementations, the findings of this four-month research project serve as a timely warning. In an exclusive interview, Professor Lu Feng, director of the Peking University Government and Enterprise Research Institute, shared his insights. When asked about the timeline and key takeaways from the report, Professor Lu explained that the process took three to four months, involving extensive fieldwork and interviews with leading companies. He emphasized that the current joint venture model is no longer viable, and that self-reliance is both necessary and achievable. He also stressed the importance of government support for indigenous firms and highlighted the need for greater control over design rights. One of the main issues identified was the lack of "design confirmation rights" in joint ventures. Foreign partners often retain full control over technical specifications, leaving Chinese companies unable to make changes without approval. This situation limits innovation and stifles the development of internal capabilities. For example, SAIC Volkswagen once faced a problem where incorrect nut sizes were provided in design drawings—yet they had no choice but to follow them exactly. Professor Lu noted that many joint ventures are essentially just "processing bases," relying entirely on foreign technology without investing in their own R&D. This trend, if continued, could lead to a scenario where China becomes nothing more than a manufacturing hub for global automakers, losing its own identity in the industry. However, there are positive examples. Companies like Changan have successfully combined joint ventures with independent development, proving that it is possible to build strong domestic capabilities. Similarly, Geely has taken a bold path, developing its first car through trial and error, showing the importance of courage and determination in the journey toward self-reliance. When asked about the difference between self-developed companies and those that rely on joint ventures, Professor Lu pointed to "courage" as the key factor. Those who actively pursue innovation are gaining experience and moving forward, while others remain stagnant, clinging to comfortable conditions. Over time, this gap will become more pronounced, and foreign partners may eventually seek to take full control, leading to the decline of traditional joint ventures. Looking ahead, the biggest challenge for China’s auto industry remains the lack of practical experience. Building a robust R&D foundation requires repeated trials, real-world data, and long-term investment. While this is a slow process, it is essential for future competitiveness. In conclusion, Professor Lu urged the industry to embrace independent development as the only sustainable path forward. Without it, China risks losing its place in the global automotive landscape. Only through self-reliance and innovation can the industry truly thrive.

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