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“On December 15, the Appellate Body of the World Trade Organization released a ruling on the dispute between China and the United States, the European Union and Canada regarding the auto parts dispute. The European Union, the United States and Canada believe that China is suspected of discrimination against the foreign taxation policy on imported auto parts. It is intended to encourage Chinese auto makers to use domestic auto parts."
background
On December 15, the Appellate Body of the World Trade Organization released a ruling on the dispute between China and the United States, the European Union and Canada on the auto parts dispute. This report maintains the results of the WTO panel of judges in July and believes that China's measures involved violated national treatment. However, the Appellate Body’s report overturned the panel’s decision that China’s practice of taxing complete sets of parts and semi-packaged Spare Parts as a whole violated the WTO commitments.
According to relevant procedures, the judgment of the Appellate Body will be approved by the WTO Dispute Settlement Body within 30 days and will take effect. After the verdict comes into effect, China must amend the non-compliance measures within a certain period of time. This period will be determined through the parties' negotiation or arbitration by the WTO.
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Our fundamental goal is not to win or lose lawsuits, but to automate the localization of auto parts. From a long-term perspective, we must profoundly reflect on the current growth model that focuses on foreign-funded enterprises and the introduction of vehicle models, and turn to domestic-funded enterprises and independent innovation-based development paths. Otherwise, our auto industry will always have only “growth†rather than “ development of".
The National Machinery and Electronic Office suspended the application for import licenses of some auto companies and conveyed a clear signal to all imported auto dealers: Multinational corporations must comply with Chinese laws and regulations while acquiring large amounts of benefits from China each year through imported cars. , taking into account the interests of dealers and consumers.
"China's auto parts import measure" case origin and development
The "China Auto Parts Import Measures Case" was caused by the "Administrative Measures for the Import of Auto Parts that Constitute the Characteristics of the Vehicles" (hereinafter referred to as "Measures") that began on April 1, 2005. According to the Measures, the key parts or components of the body, engine, and transmission are classified into A and B. The sum of imported A and B parts meets or exceeds the total defined number of imported parts and is deemed to constitute the characteristics of the vehicle; import A The number of parts that meet or exceed the defined number of A-type parts is also considered to constitute the characteristics of the vehicle; parts and components that constitute the characteristics of the entire vehicle, and parts and components that equal or exceed 60% of the value of the entire vehicle, are subject to the same tariffs as the entire vehicle. According to the current tariff rate of 25%, pure parts and components only receive an average tariff of 10%.
The European Union, the United States, and Canada believe that China is suspected of discriminating against foreign taxation on imported auto parts and is intended to encourage Chinese auto makers to use domestic auto parts. In the case of unsuccessful negotiation, the EU and the United States formally submitted a request for consultation to China in March 2006, followed by Canada. The case was collectively referred to as "China's Measures Affecting the Import of Auto Parts."
Before July 1, 2006, the General Administration of Customs, the National Development and Reform Commission, the Ministry of Finance, and the Ministry of Commerce issued a document that will set the standard for the import price percentage defining the characteristics of the entire vehicle as of July 1, 2006, and the related automobile assembly. The criteria for distinguishing the key components of category A and B of the (system) characteristics were postponed until July 1, 2008. However, the United States, Europe, and Canada require China to completely cancel the vehicle feature verification standards. On September 15, 2006, the United States, the European Union, and Canada formally requested the WTO to set up an expert group to examine China's measures to impose tariffs on imported auto parts. Relevant measures for the trial include "Industrial Policy in Automobile Industry", "Administrative Measures for the Import of Automobile Parts that Constitute the Characteristics of the Vehicle," "Rules for the Verification of Characteristics of Vehicles Consisting of Imported Automobile Parts" and any revisions, substitutions, and supplements to the above-mentioned documents. , implement the above documents or other related measures.
On February 13, the three members of the WTO expert group made a preliminary ruling in this regard, arguing that China’s policy of levying high tariffs on imported auto parts was in violation of China’s WTO commitments and ruled that the Chinese side would lose and demanded that China terminate its laws in accordance with WTO principles. This policy. The final ruling announced on December 15 maintained the ruling of the first instance. The ruling will take effect one month later.
How to treat the WTO ruling in the crisis background
In fact, the “measures†stipulated by China are designed to prevent lawbreakers from using the tax difference between vehicles and parts to evade customs supervision. This is due to the need to crack down on illegal assembly. Now such a ruling seems emotionally difficult to accept. What should be considered such a ruling?
Professor Yang Ruilong, Dean of the School of Economics at Renmin University of China, stated that we should look at this unfavorable Chinese ruling from two aspects. On the one hand, this ruling has actually lowered the threshold for foreign auto imports to China, putting pressure on China's auto industry. Especially under the impact of the current world financial crisis, the world auto industry is in a depression. On the other hand, this result should be expected. Since China's accession to the WTO, it has promised to follow the rules of the free market and participate in international competition in accordance with the rules of the game. This is what we expected. We must adjust our attitude and meet the challenge. This is the most important thing to revitalize China's auto industry.
“After the financial crisis, we can see that the United States is GM, and the German public is facing a shrinking automobile industry after the overall demand declines. It is imperative to seek exports.†Professor Yang Ruilong said that after the adjustment, the tax difference between vehicles and parts was flattened. Afterwards, the corresponding tariffs on imported cars in China are declining. It should be said that this is good news for the foreign automobile industry. However, the rate of tax revenue decline is not very large. According to the current adjustment of the Chinese auto industry, it is still possible to meet such challenges.
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Raising the localization rate is the only way for the company to grow
Faced with WTO rulings that are not conducive to the Chinese side, all parties in the market reacted differently.
Some multinational auto parts giants believe that some of China’s policies may hinder automakers from adopting imported components on Chinese-assembled cars. This situation has prompted auto parts makers to shift production to China, or will become multinational auto parts. The giant brings a turnaround.
According to statistics, many multinational component giants have already established wholly-owned or joint venture companies in the Chinese market, and their production costs are even lower than their local production in China and then exported to China. For this reason, Chinese auto parts makers said that the impact of the ruling will not be too great.
Zhong Shi, an analyst in the automotive industry in China, believes that although the “Regulations on the Management of Auto Parts Parts that Constitute the Characteristics of the Vehicles†was terminated due to the loss, most auto companies will continue to increase the localization rate and increase their competitiveness. The car companies in the procurement framework will not even go back.
At present, although the level of domestic auto parts suppliers cannot provide high-end cars such as Mercedes-Benz and BMW, as well as hybrid technology engines and transmissions, the overall level of technology is significantly increasing, and a trend that cannot be ignored is that key zero The component technology and market have been gradually transferred to China. At the same time, Chinese auto parts and components have begun to enter the international market in a large scale and actively participate in the merger and integration of the international auto parts industry.
A related person from BMW Brilliance Automotive stated that BMW will unswervingly increase the localization rate, will consider more of its own development needs, and increase the localization rate is the only way for companies to grow. In 2007, the number of suppliers of BMW in China has increased from 60 in 2006 to 100. The purchase amount has increased from 2 billion yuan to 3.6 billion yuan, and domestic BMW sales have also increased by 37% to 27,000 vehicles.
Most people in the industry tend to think that even if affected by the WTO ruling, the Chinese adjusted the relevant policies and thus reduced the tariffs on some of the parts and components imports. This will undoubtedly objectively make a large number of international companies with joint-venture vehicle companies in China. Automobile manufacturers aggressively purchase their own locally-available auto supplier products. The influx of these products will greatly impact the domestic supplier support system within a certain period. However, in the long term, as domestic auto manufacturers have increased The localization of local production, coupled with the decline in the domestic automobile prices, will be a shortcut to avoiding profitability, converting to China and increasing the localization rate.
According to Mei Xinyu, a researcher of the Ministry of Commerce, our basic goal is not to win or lose lawsuits, but to automate the localization of auto parts. From a long-term perspective, we must profoundly reflect on the current growth model that focuses on foreign-funded enterprises and the introduction of vehicle models, and turn to domestic-funded enterprises and independent innovation-based development paths. Otherwise, our auto industry will always have only “growth†rather than “ development of".
Import license for auto parts brewing major reforms
After this year's “11th†holiday, the National Electrical and Mechanical Office of the Department of Electrical and Mechanical Technology of the Ministry of Commerce suspended the application for import licenses of Hyundai Motor (China) and Kia Motors (China). This is the second time since the Lexus import license application was suspended in June, the second case of domestic import car dealers was suspended for import license application because of complaints from their dealers. Under the background of weakening domestic auto market demand, the contradiction between distributors and enterprises has increased.
Xu Bingjin, honorary chairman of the China Automobile Dealers Association, said that the National Machinery and Electronic Office suspended the application for import licenses of some auto companies and conveyed a clear signal to all imported auto dealers: multinational corporations obtain large quantities of automobiles from China each year through imported cars. While benefiting, we must abide by Chinese laws and regulations and take into account the interests of dealers and consumers. Otherwise, its business activities will also be difficult to carry out smoothly. In order to protect the rights and interests of imported car dealers, relevant departments such as the Ministry of Commerce are brewing major reforms to the management of imported car licenses.
At present, the profit prospects of the domestic auto parts industry are still promising in the industry. According to relevant statistics, China's auto parts market is still in a stage of rapid development. In 2007, the total output value of parts and components industry reached 670 billion yuan. The domestic auto parts industry is in the early stages of industry consolidation and reshuffling. The industry concentration is not high, the technology grade and scale effect are not high, and the auto parts production of the three major auto groups also has a large market advantage.
In the battle for the production of auto parts, the big steel plants stretched their tentacles to the downstream and also robbed auto parts cakes. In late January of this year, an investment plan of the world’s fourth-largest steel manufacturer and South Korea’s largest steel company, Pohang Steel, attracted the attention of domestic steel mills. However, this investment is not a steel plant but two companies. The company will invest 2.5 million U.S. dollars to set up an auto parts factory. This is the first time that POSCO has been involved in the auto parts business, and its virgin investment is in China. This move has enabled Shanghai Baosteel to have one more competitor in spare parts production.
Due to the advantages of customer channels and raw materials, more and more large-scale steel mills around the world are starting to engage in the downstream industry of auto parts industry.
Divide the big pieces of auto parts, the enthusiasm of local governments is also extremely high. Liuzhou City, Guangxi Province is making every effort to build a national-level automotive and parts export base. Liuzhou will focus on the construction of Yanghe Industrial New District and Liujiang Economic and Technological Development Zone as an important carrier for the construction of automobile and parts export bases.
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