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China into Top Gear for Auto Export Zones
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At a ceremony in Beijing yesterday attended by Vice Premier Wu Yi, Commerce Minister Bo Xilai named eight cities as China's first batch of automobile export zones.


The eight cities include Shanghai, Tianjin and Chongqing municipalities, Changchun in Jilin Province, Wuhan in Hubei Province, Xiamen in Fujian Province, Wuhu in Anhui Province and Taizhou in Zhejiang Province.


The Ministry of Commerce and the National Development and Reform Commission also named 160 vehicle and spare parts manufacturers from these cities as the first cluster to be involved in the initiative. Of these firms 61 are foreign-funded, according to the ministry.


The long-awaited move comes amid the rapid growth of China's export of vehicles and spare parts. However, the industry's business volume in this area remains small and domestic companies have been engaged in bitter overseas price wars.


Bo said industry regulators would soon issue measures to help boost the nation's vehicle and spare part exports and put the market in order.


"Expanding the export of vehicles and spare parts, especially our own brands and those with our own intellectual property rights, is the only way to enhance our auto industry's international competitiveness," Bo said.


China's vehicle and spare parts exports were worth US$10.9 billion last year, up 34 percent from 2004. In addition, the nation's vehicle exports more than doubled to 173,000 units in 2005, surpassing vehicle imports for the first time.


However, vehicle and spare parts exports only accounted for 7.3 percent of the total output value of China's auto sector. In contrast over 40 percent of vehicles made in Germany, Japan and South Korea are exported.


China is currently the world's fourth-biggest auto-making nation after the US, Japan and Germany. It produced 5.71 million vehicles in 2005 and output is expected to reach 7 million this year. The nation has more than 5,800 vehicle and spare parts manufacturers.


Bo said China's vehicle and spare parts exporters face major risks due to a host of problems such as domestic producers' weak independent development capabilities, stricter foreign environmental and safety standards and a lack of shipping capacity. Chinese automakers mainly sell buses, trucks and low-end cars in overseas markets.


Also yesterday 17 of the automakers named by Bo agreed to form 15-year strategic alliances with China Ocean Shipping Group and China Export & Credit Insurance Corp to expand their shipping capacity and avoid export credit risks.


Zhu Yanfeng, general manager of First Automotive Works Corp (FAW), a partner of Volkswagen and Toyota, said the company would step up its efforts to improve its independent development capabilities and branch out into overseas markets.


"We will extend sales networks, improve services and focus on our own-brand vehicles in the overseas market to build up a new global image for Chinese-made vehicles," Zhu said.


He stressed that Changhcun-based FAW would also respect intellectual property rights. FAW's own-brand line-up includes trucks, buses, mini vans and cars.


(China Daily August 18, 2006)

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