Innovative enterprises should be encouraged

Professor Yang Yanping: associate director of China Auto Technology and Industrial R&D Center 

It's hard to predict how long the large-scale mergers and acquisitions will happen in China's auto industry and who will develop into the core groups. The government should not restrict the development of small enterprises. What the foreigners fear most is the private auto company with a flexible system.

Yang believes that, merger and restructuring is the major task for China's auto industry for a long time. Only eventual formation of several large enterprise groups with large-scale production, technological development capacity, product lines, rational division and coordination could make the Chinese auto industry international competitiveness. However, currently market competition is insufficient. The original policy called "levitate the big" and "limit the small" proved to be no positive impact on the development of the Chinese auto industry. For this reason, Yang suggested that the state should support the flexible, innovative small and medium-sized enterprises to participate in competition actively and grew up in the competition, and encourage enterprises shift the emphasis from expanding production and increasing market share to advancing the tech level and innovation capacity during the process of merger and reorganization.

Moreover, Yang pointed out, the automobile industry and the academic communities have different views on the problem of over-production. On one hand there are uncertainties about the accuracy statistics of production, and it is hard to judge how many ineffective productions. On the other hand, to estimate the demand of vehicle consumption, we should not only focus on the domestic market, but also increasing export.

Yang  suggested that, the current focus of Automobile over-production regulation, should on the establishment of the strictly withdrawal mechanism and encourage the merger and reorganization of enterprises. The existing policy always focuses on entry requirements, and less articles about quitting. Relevant government departments should establish a withdrawal mechanism quickly through legislation to avoid the loss of consumers and dealers after quitting.

The appropriate over-production is good for competition, and full competition in the market can spur technological progress, quality optimization and management advancing. To maintain a certain degree of over-production capacity is not a bad thing. The point lies in how to avoid disorder, low level competition. Therefore, the government should strive to create a fair, just and competitive environment, improve the government's services and regulatory functions, for instance, to improve the investment approval system, to establish a self-correct decision making mechanism and to strictly control the low-level repeat of construction and introduction without understanding. (The end)