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An Interview with Erlkönig China: The Automotive Industry in China

(July 30th, 2014)

By ECOVIS Beijing

On Wednesday, 16th of July 2014, Mr. Sven Hundhausen, Director of Erlkönig China held an interview with Mr. Constantin Colberg, Senior Associate at ECOVIS Beijing, about the automotive Industry in China. Current issues such as market entry options for foreign OEMs, strategies of Chinese companies and E-Mobility in China were amongst the topics discussed. The full interview is now available.

Click now to watch the video on YouTube or Youku!

the_automotive_industry_in_china_1the_automotive_industry_in_china_2Erlkönig GmbH is a German consulting firm that offers strategic advisory services to automotive and technology companies. It currently holds offices at five locations in Germany and China in order to support clients throughout their implementation processes in Europe and Asia. Other areas of expertise include project management, processes, organization, reorganization and innovation. Mr. Sven Hundhausen is Partner of Erlkönig GmbH and Director of Erlkönig China. For any questions regarding automotive business in China, please contact Mr. Sven Hundhausen via e-mail at sven.hundhausen@erlkoenig.de.

Please also read the following extract about the advantages and disadvantages of Joint Ventures in China to get a brief insight into the topics covered throughout the interview.

Constantin Colberg: What types of investment exist for foreign automotive companies in China? How would you recommend these companies enter the Chinese market?

Sven Hundhausen: It depends whether we mean local business, local production or import business. You often need to use 100% subsidiaries to run an import business – we have OEMs here doing this. Of course, that would never give you the potential that this market really offers. You would have to deal with the import taxes and so on. With regard to the local production, especially the premium segment does not have many choices up to now. As soon as you move into those strategic branches – fields that the Chinese government has distinguished – you are forced to have these Joint Venture structures.

There are some grey areas such as Variable Interest Entities which are a rather strange group of constructs used by foreign companies to avoid the Joint Venture regulations. But this is nothing that you can apply on the scale we are talking about when it comes to OEM production in China. If you ask me for a recommendation, there is nothing else to recommend other than to follow the existing rules. This might change given that some authorities think that Joint Venture regulations are not promoting the market. So the joint venture requirement may drop one day but right now we don’t know when.

Click now to watch the video on YouTube or Youku!


With contributions by Markus Mönch (ECOVIS Beijing)

Richard Hoffmann Richard Hoffmann is a Partner at ECOVIS Beijing China. Richard obtained an honor’s degree in law and worked in Germany, America and China for various prestigious law firms prior to joining ECOVIS. He has published more than fifty articles in international magazines, frequently speaks at high profile events in China and abroad and is often invited as a legal expert by international TV. Contact: richard.hoffmann@ecovis.com
Ecovis Beijing is the trusted tax and legal advisor of several embassies and official institutions in China. It specializes in mid-sized international companies and focused on tax & legal advisory, accounting and auditing. If you’re interested in finding out more about tax and legal, don’t hesitate to sign up to our Newsletter or give us a call +86 10-65616609 (ext 811/806) or contact us directly via Beijing@ecovis.com
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