Summary of Key Points
This article focuses on the issue of low-price competition in China's automotive market overseas, highlighting that the "Guidelines for Overseas Competition Behaviors and Compliance in the Automotive Industry" issued by the Ministry of Commerce and other departments have proven ineffective due to the lack of mandatory enforcement. Research indicates that the benefits of export tax rebates are being exploited by overseas dealers through price negotiations, placing financial pressure on Chinese companies. The article proposes a gradual reduction and eventual elimination of export tax rebates for passenger vehicles, aiming to shift Chinese automotive exports from a focus on low prices to a strategy of global operations. It also suggests supporting companies in localizing their operations overseas and developing core technologies to enhance their long-term competitiveness.
Detailed Analysis
1. Overseas Low-Price Competition: Chinese Automakers Damaging Their Own Brands
China is now the world's largest exporter of automobiles, but in many overseas markets, the main competitors are not Toyota or Volkswagen, but other Chinese brands. The mutual price cuts are causing significant price fluctuations and undermining brand value. For example, if one brand reduces the price by 5,000 yuan, another may reduce it by 10,000 yuan, resulting in no profit for either party and creating the perception that Chinese cars are of poor quality at low prices.
The government's guidelines aim to regulate this, but they are merely advisory with no penalties such as fines or loss of export qualifications, making their effectiveness uncertain.
2. Export Tax Rebates Being Exploited by Overseas Dealers
Export tax rebates are designed to help companies by refunding a portion of the value-added tax, giving exported goods a competitive price advantage. However, overseas dealers are now using this knowledge to negotiate lower prices, effectively taking the benefit before the companies receive the rebate. Companies have to cover the production and transportation costs in advance and wait months to receive the rebate, leading to financial strain. Some exporters even prefer not to receive the rebate, as it is used as an excuse for price cuts.
3. Initiatives Are Insufficient; Realistic Adjustments to Tax Rebates Are Needed
The guidelines provide a soft reminder to companies not to cut prices arbitrarily, but they do not address the underlying costs and competitive dynamics. Adjusting the tax rebate rates would be a more effective measure. If the rebate rate is reduced or eliminated, companies' export costs would increase, making it harder to engage in price wars. This is similar to the situation in the photovoltaic and battery industries, where rebates were gradually phased out as the technologies matured. Chinese automakers, with their advanced technology and supply chains, no longer rely on rebates to maintain a competitive edge.
4. Adjusting Tax Rebates Is Not About Weakening Competitiveness, but About Forcing Upgrades
Many fear that the elimination of rebates will harm exports, but the article argues that exports and going global are different concepts. Exporting means selling cars domestically produced goods; going global involves setting up factories, conducting research and development, and providing after-sales services overseas. Eliminating rebates would encourage companies to shift from simply exporting vehicles to locally manufacturing them in overseas markets. This would lead to a more valuable export chain, with increased profits from parts, equipment, and software sales.
5. How to Adjust Tax Rebates Reasonably?
The article suggests the following steps:
- Gradual Reductions: Start by lowering the rebate rate from 13% to 9%, then to 5%, and finally eliminate it, giving companies time to adjust (e.g., the photovoltaic industry took less than two years to adjust).
- Differentiated Treatment: Eliminate rebates for more competitive new energy vehicles first, with a longer transition period for fuel vehicles.
- Invest the Savings Wisely: Use the saved tax rebates to support overseas factory construction (low-interest loans, insurance), core technology research (solid-state batteries, autonomous driving), and domestic consumption (to offset the impact of reduced exports).
- Simplify Overseas Investment Procedures: Relax foreign exchange controls and simplify employee visa processes to make it easier for companies to expand overseas.
Conclusion
Eliminating export tax rebates is not about cutting benefits but about shifting Chinese automotive companies from competing on price to competing on quality and building a global ecosystem. This proactive approach is better than being forced to change due to trade barriers.