CHINA: BMW expansion knockback raises concerns

Just-Auto.com, July 30, 2013

A regulatory refusal for the expansion of a BMW joint venture factory in China has added to recent concern global automakers could find it increasingly difficult to win approval for projects in the country.

According to Bloomberg News, shares in BMW partner Brilliance China Automotive Holdings fell the most in almost four weeks in Hong Kong after China’s Ministry of Environmental Protection said it sent back an application, citing inadequate wastewater analysis and the plan’s failure to meet government anti-pollution targets.

“The ease of expansion is probably not going to be as easy as in the past,” Bill Russo, Beijing-based president of automotive consultant Synergistics, told the news agency.

Russo, in China for the past decade, said he can’t recall the government ever issuing a statement knocking back an automaker’s expansion plans for an existing project.

BMW spokesman Alexander Bilgeri said the ministry asked for additional documents and that the government decision on the project wasn’t final. Such events are routine, he said.

But Russo, a former executive for Chrysler told Bloomberg turning down approvals to expand an existing project was “unusual”.

In a statement on the ministry’s website, the government said it didn’t approve BMW Brilliance Automotive’s plans for the third phase of a factory in the northeastern Chinese city of Shenyang. The first phase of the plant has yet to pass an inspection, it said.

The Economic Information Daily, one of the official Xinhua News Agency’s newspapers, reported on 29 July industry officials are increasingly calling for China to start an investigation into imported car prices. Profit from selling imported luxury cars in China was 30% higher than the global average, the newspaper said, citing China Automobile Dealers Association executive vice president and secretary general Shen Jianjun

Getting lower-level bureaus to sign off on manufacturing projects are among the first regulatory steps for foreign companies before they receive central government approval, Bloomberg noted.

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