BEIJING -- China is establishing eight export zones to help meet a goal of boosting exports of vehicles and automotive components by 40 percent annually over the next five years, said Bo Xilai, China's minister of commerce.
Details have not been announced, but Chinese companies are already singing the policy's praises.
"This will definitely be good for us," says Zhang Xiaodong, spokesman for Geely Automobile Holdings Group. "The government will give us a lot of support." Geely is developing cars that it hopes to export to the United States in a few years.
The creation of the zones was announced Aug. 17 at a conference here. At that time, Bo named 160 companies that would be beneficiaries of government support within the zones. Of those, 61 are foreign-invested.
The list includes auto manufacturers Geely, Chery Automobile Co. and Great Wall Motor Co., all of which aim to export to the United States and Europe. Also included are component manufacturer Wanxiang Group and Shanghai General Motors, GM's joint venture with Shanghai Automotive Industry Corp. A complete list of companies was not published.
"Expansion of the export of vehicles and components, especially our own brands and those with our own intellectual-property rights, is the only way to enhance the auto industry's competitiveness," Bo was reported as saying.
Foreign companies are cautious in their assessment of the zones' impact.
"In the absence of concrete details of the plan, it might be too early to predict how it will affect the industry and the various players," says Neville Rudd, director of braking, modules and electronics for TRW Asia Pacific. TRW is not on the list.
Paul Gao, a principal with consultants McKinsey & Co. in Shanghai, says domestic companies are the target beneficiaries.
"The objectives are, one, signaling a shift of the Chinese export focus from low value-added goods to higher value-added product categories and, two, a concrete step in support of development of the domestic automotive industry," Gao says.
China's 2005 automotive industry exports totaled $10.9 billion, up 34.0 percent from the previous year. But, Bo said, Chinese companies have been hampered by their relatively low level of technology.
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