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Partnerships crucial in Chinese market: Ford
No local team-up in Chinese market a ‘significant disadvantage’ according to Ford
27 Apr 2018
By TUNG NGUYEN in BEIJING
FORD Asia-Pacific vice-president of product development Trevor Worthington believes partnerships with Chinese car-makers are vital to succeed in the world’s largest automotive market, as the Blue Oval brand seeks approval for an unprecedented third joint venture (JV).
Speaking with GoAuto at this week’s Beijing motor show, Mr Worthington highlighted the importance of having partners in the 28 million-unit Chinese market.
“I guess working in this market … relationships are really, really important to be able to successfully function,” he said. “Whether it’s a relationship with a JV partner, or a relationship with the local government, relationship with the regional government, relationship with a supplier, relationship with the rule-makers in federal government.
“A lot of those relationships are fundamental to be able to be successful, and so the rules are very new and we don’t have an official position because … it is that new, but I guess my perspective, having been here and having worked in Japan, worked in Australia a lot, worked in the US, worked in China, that partnerships are probably more important here than probably anywhere else.”
Changes to China’s automotive policy announced in April means that by 2022 foreign car-makers will no longer need to form a partnership with a domestic manufacturer to avoid a 25 per cent tariff.
Mr Worthington said it was in Ford’s best interests to continue with its existing partnerships with Changan and Jiangling Motors (JMC).
“They’re not mandating (the rule changes), they are just saying if you want to do it on your own, those restrictions that you have to have a partner are no longer there,” he said.
“The worst case for us, or the best case for us, is nothing. We would just remain with what we’re doing.
“We’ve got two JVs – one’s more focussed on cars, the other’s more focussed on commercials – and we’re working our way towards hopefully getting regulatory requirements through for a third JV by the end of the year.
“I think not having the partnership, especially the local partnership, would be a significant disadvantage.”
Mr Worthington said the unique Chinese market provided challenges form companies wanting to sell vehicles alone, but he added that a firm decision on Ford’s future in China was still to be decided.
“Any relationship … always has challenges, there are always difficulties because everyone has got two different perspectives, but to some extent, the benefit of a relationship is if you can work through that and come to an aligned perspective, then presumable, the answer you’ve come to is better than the solution you would have come to on your own,” he said.
“I think we’ve got to work our way through it (the policy changes) … but in an environment like China, which is very, very, very unique, I can’t imagine the level of difficulty there would be if you didn’t have partnerships.
“I think that would maybe … frame our perspective on what we would do, but that’s all work to be done, we’ve still got to work our way through that.”
Last year, Ford announced its intent for another 50:50 JV with Zotye to build all-electric, non-Ford-branded vehicles for the Chinese domestic market, which Mr Worthington hoped would be approved by year’s end.
“This would be an indigenously branded set of products very much targeted to towards, kind of the smallish, lower end, lower range, value end of battery electric vehicles, so that’s what we’re working through,” he said.
“A lot of detail we’re going through in terms of regulatory compliance and how big it will be and where we will set up and what expertise’s it will have and what help its going to need, but it’s kind of really a work in progress and we’re really hoping by the end of this year we’ll be able to get to the point where the government agrees that it wants to give us regulatory approval and we can get going.”
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