Three State-owned Chinese automakers announced on Dec 1 a broad cooperation plan to promote technological innovation, optimize full-value chain operations, expand global markets and explore new business models.

The agreement among FAW Group Corp, Dongfeng Motor Corp and Chongqing Changan Automobile Co was signed on Dec 1 in Wuhan, Hubei province, where Dongfeng is based.

A major highlight of the deal is that the three companies will jointly build a technology center that will focus primarily on new energy cars, smart and internet-connected cars as well as lightweight car bodies, and also share the results. The specific schedule and investment involved have not yet been disclosed.

With the automotive sector in the country witnessing sweeping changes, the cooperation will help Chinese carmakers to gain considerable scale and build better and more competitive car brands, Changan said in a statement.

Cui Dongshu, secretary-general of the China Passenger Car Association, says, "Cooperation in fundamental research and development would be beneficial, but whether the benefits can be transformed into improved market performance will also depend on their respective corporate strategies."

According to the deal, the three will work together in conventional fuel-powered cars as well, in terms of platforms and powertrains, production, procurement and logistics.

They will also explore car-sharing and mobility services and join hands to increase in overseas markets, with plans to expand cooperation in such areas as overseas production facilities, business partners and dealerships.

The deal comes at a time when China is planning to become a global automotive power within 10 years.

"We are not strong in innovation; we have not seen enough coordination; and we have few transformative, innovative technologies," said Minister of Industry and Information Technology Miao Wei when he unveiled China's car development plan in April.

"Chinese brands need to improve their core competitiveness, since we have few internationally competitive companies. We should attach importance to the problems and actively solve them," he said.

John Zeng, managing director of LMC Automotive Shanghai, says cooperation moves such as that undertaken by the three companies might not generate desired results if they are not coordinated or managed properly.

lifusheng@chinadaily.com.cn

(China Daily European Weekly 12/08/2017 page29)