Hopefully we won't see any tariffs on them in US/Europe. Or am I too late with this hope?
>[Musk] said China puts a 25 percent import duty on American cars, while the U.S. only does 2.5 percent for Chinese cars. He added that no American car company is "allowed to own even 50% of their own factory" in the Asian country, but China's auto firms can own their companies in the U.S.
https://www.cnbc.com/2018/03/08/elon-musk-sides-with-trump-o...
Agree about the 49% thing, and it's not limited to car factories.
https://money.cnn.com/2018/05/24/news/car-auto-tariffs-us-ge...
US have several laws to protect against just that.
With all that in mind, however, other countries would be fools to allow this sort of economic asymmetry to continue. Especially at this point, when China is the second largest economy (and largest when adjusted by PPP), China doesn't need this kind of protection and is simply not playing fair. I don't know if tariffs are the best way of leveling the playing field but some sort of rebalancing and leveling of the playing field must happen because otherwise it is simply a rigged game.
There is even a very good argument that can be made that direct, unfettered foreign investment now would benefit China given its large consumer base with money to spend. Otherwise, the Chinese consumer is simply indirectly subsidizing Chinese corporations who made not have to compete as hard because of these protections.
This is incorrect, and has not been the case for a very long time, please don't spread FUD.
Wholly Owned Foreign Enterprise https://en.wikipedia.org/wiki/Wholly_Foreign-Owned_Enterpris...
There's a lot of circularity in your comment.
A company can be wholly foreign owned.
A foreign owned company can sell in China, it can declare tax and issue receipts, employ people, rent office or factory space, build a building, the whole hog.
I'm not sure where what niche you are in regarding import/export taxes, opening factories, and employing cheap labour all in one gulp of air.
Wholly foreign owned companies in China are legal entities and have been for a long time, your comment "foreigners cannot own the majority of ANY company" is factually wrong and is FUD.
Do you have an agenda with these comments? Please don't make HN political.
WFOE cannot sell directly to Chinese consumers. The way WFOE sell to the Chinese domestic is essentially by "exporting" and "importing" its own products again, thus subject to taxes on such activities ( https://www.set-up-company.com/joint-venture-vs.-wfoe:-which... -- "Scope of Business" Wish I could find a better source on this). A friend of mine interned at one of these firms that basically specializes in these creative "re-import" businesses but I don't know what these firms are called.
Not sure why my comments generates such a reaction from you that you accuse me of FUD or being political. It's certainly not intended as such. I study Chinese history as a hobby, especially modern history. I have friends and family who do business in China (and own businesses in China). My comments were intended to add more information and background to the original comment by combining what I've read and what I've heard. But sometimes intentions and outcomes don't match up. Apologies if my comments injected too much of my own perspective on the subject.
Well, I can open up a sandwich shop. A foreign owned entity will indeed probably get scrutiny. A couple of friends have shops selling sandwiches (one toasted, one pizza type). They are WFOEs!
I don't sell sandwiches. I mainly work in tech, finance and HR (generalist, I suppose). Some industries are controlled, even in another reply someone mentioned Tesla's plant is 100% owned. If waving fans, I have been in China (mainland) for two decades.
What you type about ownership rules is utterly incorrect. You don't seem able to drop the ball.
Edit: I'm going to drop the ball here and discontinue this. I wish you a good day.
And you aren't going to realistically sell anything, because Chinese companies always win.
And after partnering, you can't easily get your money outside of China, that was why BTC was extremely popular there, untill it got regulated. Even for an individual, the limit is 50.000$/year for exchanging money.
Give me an example of something that launched there that was not a luxury clothing good ( eg. D&G)
Even something as steam needs a local partner to launch there. So the "wholly owned" thing is not a solution.
It just "exists" for the sake of an argument. My parent company sells in the entire world except China because of that ( and some very small other countries). So I'm not exactly an outsider, it was my question to the "top guys", sort of speak :)
It was also what I thought before I asked it. So yeah, it is a thing without a doubt.
China does what everyone else does, but usually better in the long game. I both admire it and am terrified by it. We helped make this game. And we can't simply talk about fairness when we're not the benefactors.
Edit: https://techcrunch.com/2018/10/17/tesla-inks-deal-for-gigafa... Seems like this is the start of a trend and the rules for joint ventures have changed. I stand corrected.
That was the case decades ago, but it hasn't been the case for a long time. For several decades, China has been progressively removing ownership restrictions from different sectors of the economy. It removed restrictions on auto parts in 1993. It removed restrictions on automobiles last year. Foreigners can actually own majority stakes in most sectors now.
Tesla is an example of this. They do not operate as a joint venture in China.
I'm betting that if the China auto industry will be successful, just like Huawei is, we're gonna see some tariffs and "human rights" accusations and all sorts of dirty politics.