China's decision to allow foreign car manufacturers to own 100% wholly of their enterprises may create more growth amidst US-China trade disputes.
SUMMARY
As of May 10, multiple sources have reported that American car manufacturer Ford’s imports coming through Chinese customs have been held up with unusual delays from officials insisting upon additional technical checks. Back in 2006, Ford initiated a $5 billion USD plan to build dealerships and additional factory space in the country, hoping to surpass brands that already had a strong presence in China, such as General Motors and Volkswagen. This isn’t the only financial trouble Ford is facing right now – recently the car manufacturer has committed the company to an aggressive cost-cutting program with the hope of improving their bottom line. Back in April, Ford announced it would be dropping its sedan models. Ford is far behind competitors in the areas of electric and autonomous vehicle development as well which is a growing sector in both countries. These issues come amid major trade tensions between the United States and China with some experts claiming this is Beijing’s way of taking a stance against US President Trump’s tariffs. Other American imports are being delayed at customs including pork shipments. In mid-April, Beijing announced it would be easing laws requiring foreign entities to find local partners before building factories.
FAO GLOBAL ASSESSMENT
Ford’s Chinese customs hold up is not only a indicator of increased scrutiny by Beijing of American imports, it also spells bad news for the U.S. car maker. If Ford is forced to drastically downsize their operation or even close its doors entirely, it would have a major impact on manufacturers in its supply chain. If Ford decides that the Chinese market is worth fighting for, one option Ford should consider building factories inside China’s borders. However, this decision would likely strike a chord in the U.S. manufacturing sector under U.S. President Donald Trump’s initiative to reinvigorate U.S. manufacturing. The recent announcement to relax laws on automotive investments could open new opportunities to the foreign car manufacturers, suppliers, and dealerships.
Related Links
- Axios – Growing list of US products face issues at China’s borders
- The Globe and Mail – Ford imports delayed at Chinese port amid trade tensions
- The Wall Street Journal – Why Ford’s Big China Wager Is Faltering
- Reuters – Ford accelerates cost-cutting plan, will drop most U.S. sedans
- Reuters – Red light: Ford facing hold-ups at China ports amid trade friction
Custom Intelligence Briefs are available for corporate account holders. We can provide daily or weekly updates on local market conditions, policy impacts, regional events, or industry changes that affect operations or strategy.
ABOUT CHINA INTELLIGENCE BRIEFS
The China Intelligence Briefs are the start of a global initiative to provide context and recommendations to businesses, non-profit organizations, and policy makers who are looking for specific examples of opportunity or disruption from global events. While analyzing the macro problems we often identify specific issues that affect our clients and readers. Identifying both opportunities & challenges allow us to better identify solutions at home and abroad for a wide range of disciplines. In addition to the China Intelligence Briefs, we maintain detailed notes from interviews, overseas trips & business missions, conferences, conventions, and private events. We provide access to these notes and other analytical products for clients and paid subscribers.
Headquartered in Washington, DC with Affiliates in China
Our Analysts, Associates, Consultants, and Interns all possess extensive experience in a foreign country and a foreign language capability. Our talent pool includes graduates from the elite Tsinghua University in Beijing, Georgetown University, George Washington University, UC Berkeley, and University of South Carolina. Being based in the Washington, DC Metro Area provides our team the advantage to build relationships with policy makers, foreign diplomats, business leaders, and non-profit groups providing a holistic view of global policy and the impacts to the business community. In addition to being based in the Washington, DC area, we retain the input and advice from affiliates located in China. This allows us to maintain on-ground awareness of changing business and political environment conditions and facilitate client projects between the two countries and the greater Asia continent.
All Intelligence Briefs are reviewed and guided by a Senior Analyst before publication.
