Friday, December 13, 2013

Dongfeng, Renault Receive China Approval for $1.3 Billion Car-Making Venture

“Dongfeng, Renault Receive China Approval for $1.3 Billion Car-Making Venture”
December 5, 2013

After nearly a decade of trying to persuade the Chinese government to support them, Dongfeng and Renault have been given the green light to have a $1.3 billion car-making venture in China.  This venture will significantly boost both companies, especially Renault since it was only able to sell about 30,000 cars in china last year without having a local production facility. Although the Chinese auto sales surpassed 19 million cars, this could increase to over 20 million by the following year. The Chinese market has been seen to be a huge market that would allow companies such as Renault to benefit from such a great venture.

The Chinese market has a “weakness for European sales,” which will only catapult the 50-50 joint venture between Dongfeng and Renault even farther. It has been said that production could possibly begin as soon as 2015, however neither company has stated exactly when. Dongfeng, being China’s second-largest carmaker by production and sales, will “enhance the overall competitiveness, brand value and technical strength and profitability” of Renault. Having Dongfeng in the mix could have pushed Renault into the Chinese auto market with a local manufacturing entity. Although Renault did have some implementation in the market previously, it was only through their South Korean subsidiary Renault Samsung Motors.

It seems to be very interesting that a decade long venture with Renault and Dongfeng has only just now been granted. Being paired with Dongfeng does give Renault a certain amount of strength in the Chinese market, however their independency in the Chinese auto market is yet to come. It is understandable that coming from different countries the cultural dynamics between China and France is not the same. Because the Chinese culture is so much different from that of France’s, the auto industry must alter the way they promote cars and manufacture them. Additionally the turnover of cars should also be taken into consideration. I believe that this venture is a positive one for all members, Dongfeng, China and Renault. Dongfeng is able to get an increasing amount of respect in the European word. The Chinese auto industry will have a larger amount of competition with Renault now firmly in the mix, as well as more variety. Renault is able to finally have a manufacturing venture that will aid in local sales and promotions.

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