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The Rules for the Administration of Commercial Vehicle Manufacturing Enterprises and Product Access Management (hereinafter referred to as the “Rulesâ€) formulated by the Ministry of Industry and Information Technology was formally implemented on January 1, 2011. It is understood that the purpose of implementing the "Rules" is mainly to curb overheating of investment and overcapacity due to overheated investment.
In 2010, China's commercial vehicle industry developed rapidly, and heavy truck sales exceeded the one million mark for the first time, a year-on-year increase of 64.45%. Such a good market trend, like a huge magnet, attracts capital from all directions to the commercial vehicle sector. At present, China's commercial vehicle production capacity has been able to meet the market demand, further investment may have excess capacity. Out of fear of overheating investment, the Ministry of Industry and Information Technology issued the "Regulations."
The "Regulations" stipulates that the new production plan for companies entering the commercial vehicle sector: no less than 10,000 heavy trucks, no less than 50,000 medium-sized trucks, no less than 100,000 light trucks, and no less than 5000 large and medium-sized buses. The number of light buses is no less than 50,000. The production of commercial vehicles should be commensurate with the requirements for obtaining access permits. This provision clearly puts forward the entry barrier for the production of new commercial vehicle manufacturers.
The "rules" have a high demand for production. Some domestic companies that have already entered the commercial vehicle sector fail to meet this standard. According to the data from China Association of Automobile Manufacturers, No. 12, 2010 “Production and Marketing of China’s Automobile Industryâ€, as of November 2010, of the 26 companies that manufacture heavy trucks, only 7 have accumulated production from 1 to 11 months, which is less than 1,000. There are 10 cars. Among them, China's Yituo Group, Shanghai Huizhong Automobile Manufacturing Co., Ltd., and Shandong Automobile Manufacturing Co., Ltd. have produced less than 100 vehicles in the first 11 months of 2010.
Of the 24 companies that manufacture medium-sized trucks, only five have accumulated production from January to November 2010 and seven have less than one thousand. Among them, the total output of Seiko Zhenjiang Automobile Manufacturing Co., Ltd. and Nanjing Xugong Automobile Manufacturing Co., Ltd. in the first 11 months of 2010 was less than 100 units.
Of the 41 companies that manufacture light goods vehicles, only four companies had cumulative production of 100,000 vehicles in January-November 2010, and 20 companies had less than 10,000 vehicles. Among them, the output of seven companies such as Zhongshun Automobile Holdings Co., Ltd., Haima Commercial Vehicle Co., Ltd., and Jiangxi Huaxiang Fuqi Automobile Co., Ltd. was 0.
Of the 17 companies that produce minivans, only one company has accumulated production of 100,000 units in January-November 2010, and seven companies have reached 10,000, and four companies have less than one thousand. Under this circumstance, the Ministry of Industry and Information Technology (MIIT) clearly stated in the "Regulations" the annual production access standards, precisely in order to prevent the emergence of more shell companies in the future of commercial vehicles.
In the case of overheated investment in the commercial vehicle sector, the Ministry of Industry and Information Technology launched the "Rules" to prevent overheated investment and overcapacity. The original intention is good. Some experts believe that it is still unknown whether the objectives of the "Rules" can be achieved in a market economy environment. Investment is a kind of economic behavior. The market economy itself has a regulatory role. It is more effective for the market to regulate the allocation of resources.
The "Rules" cannot actually limit investment overheating. In the past 10 years, the relevant government departments have hardly newly approved commercial vehicle production plants. Some auto companies have more production qualifications, such as some low-speed auto companies have auto production qualifications. In recent years, new companies entering the commercial vehicle sector have basically crossed the threshold by acquiring qualified automobile manufacturers rather than applying for entry. For example, a large-scale commercial vehicle company in Beijing used to be a low-speed automobile company, and entering the commercial vehicle sector was not through the application of an access method. Shanxi Universiade also entered the commercial vehicle production field by acquiring truck companies. It can be said that the relevant government departments have barely opened their mouths to newly approved enterprises with commercial vehicle production qualifications. Therefore, the "rules" have no significant effect on the production capacity.
Suppression of excess capacity alone cannot be controlled by executive orders. Those companies that are poorly managed will naturally be eliminated by the market. At present, the truck market is in a good state of development. Funds in the capital market will naturally flow to this industry. The government should actively guide and let companies judge for themselves whether they should enter the commercial vehicle market. In order to successfully operate a commercial vehicle company, in addition to production qualifications, the overall strength of the company and the market acceptance of the product are also important.
The relevant government departments make provision for the entry of commercial vehicles. The intention is good, but whether such a provision has sufficient basis is worth exploring. Among truck companies in China, there are many small and medium-sized enterprises besides large companies such as China National Heavy Duty Truck Group, Shaanxi Heavy Duty Truck, Beiqi Foton, and Dongfeng Commercial Vehicle. Businesses are big and small, which is an indication of an active market competition. In addition, small and medium-sized enterprises can meet the needs of customers in small batches, and large-scale production can hardly meet the differentiated needs of users. Therefore, simply specifying the scale of production of the company may not be appropriate.
For the current situation of overheated investment, as long as the market competition is benign, it can solve the problem of overheated investment, and government intervention may not always be effective. Some commercial vehicle companies appear to have large sales, but their technical level may not be high. Some companies do not have high output, but they have relatively high technological content and can meet the needs of high-end customers. From this perspective, the "Rules" only protects companies with large production and sales volume, and it is unfavorable for those new entrants with advanced technology for a few high-end customers.
Zhang Chunlin, Minister of Management of FAW Jiefang Automobile Co., Ltd. thinks:
"The technical access threshold should be set"
It is necessary for the Ministry of Industry and Information Technology to implement the Rules. At present, the commercial vehicle sector really needs to be remedied, otherwise the market will become more and more chaotic. The market for commercial vehicles is good, and many companies want to join this market segment. The relevant government departments should give them control. From the production capacity control, I think it is feasible. Small-scale production enterprises have unstable product quality and are not competitive. Therefore, not only is it necessary to have a threshold for scale, but it is also necessary to set technical access thresholds. At present, many truck companies in China have little production scale, and key assemblies such as engines, axles, and transmissions are basically outsourced. They can only do some assembly and lack core technologies. Such enterprises are difficult to sustainably develop. The relevant departments of the government set a threshold for production capacity, which may bring about some unexpected negative effects. It is also not possible to achieve all the goals. It is certainly not appropriate to completely liberalize and liberalize.
Wan Xujun, Director of Marketing Management Department of Foton Motor Marketing Company, believes:
"Surviving the fittest through market competition"
The impact of the "Regulations for Commercial Vehicle Manufacturing Enterprises and Product Access Management" on new entrants is considerable. For example, it is very difficult for a bus company to go on a light truck project. An annual output of 100,000 vehicles is not a small number, and the scale of the scale is set at a relatively high level. In my opinion, we must rely on the auto market as much as we can to adjust and survive the competition. To a certain extent, the "Rules" are a kind of protection for enterprises that do not push forward, produce and sell at low levels for many years. Because of the excessively high threshold, it is possible to exclude some really competitive companies.
Zhang Dongfan, Marketing Department of Dongfeng Liuzhou Automobile Sales Company, believes:
"The government needs to guide investment"
The implementation of the "Regulations" can reduce the flow of speculative capital into the commercial vehicle sector. The production capacity of the truck industry in China is already very impressive. Even if there are no new companies, the production capacity is also sufficient. Some enterprises with low production efficiency only think that this industry is profitable. When all aspects are immature, they are rushing to work on the project.
The commercial vehicle market in China has its own characteristics and it is impossible to completely adjust the market. Therefore, it is necessary for the government to introduce relevant policies to guide investment. In addition, some new entry companies have the background of local government support, which requires the relevant state departments to control according to the "Regulations."
Zhang Weidong, Brand Department of Suzhou Jinlong Overseas Sales Company believes:
“The higher the access threshold, the greater the possibility of monopolyâ€
It is more difficult for new companies to enter the bus industry at present. For example, the United States has strong financial strength and wants to enter the bus industry, but it still cannot successfully enter this field. In fact, whether there are "rules" will not have much impact on the bus industry. If we want to say what role the "Rules" can play, it will restrict the entry of some small private entrepreneurs in the country into the passenger car sector. Judging from the current status of the development of China's passenger car industry, it may gradually move toward monopoly, and Sanlong Yitong now accounts for 70% to 80% of the large and medium-sized bus market. In this case, the higher the threshold, the greater the possibility of monopoly.