Insiders have revealed that a proposed joint venture between Subaru and Chery Automobile Ltd. will likely be blocked by Chinese authorities because of the former’s connection with Toyota.
The government of the world’s most populous country essentially sees Subaru as part of Toyota because of Toyota’s stake in Fuji Heavy Industries, Subaru’s parent company. From that viewpoint, the partnership would be Toyota’s third in China, putting it over the regulatory limit imposed by China’s National Development and Reform Commission.
China requires all foreign companies wishing to produce and sell goods within its boarders to partner with a domestic business. A partnership with Chery, China’s seventh-largest automaker, is seen as vital to Fuji’s goal of selling 180,000 vehicles in the country and expanding global sales by 42 percent to 900,000 by 2015.
The venture should not be rejected because Toyota’s stake is only 16.5 percent, said a Fuji executive who wished to remain anonymous.
Besides Daihatsu Motors, Subaru is the only Japanese automaker without a production partnership in China. A 25 percent tax on imported cars currently makes Subaru’s more expensive than locally made vehicles.
References
1.’China Government Said…’ view
