* Chinese regulator becoming increasingly assertive
* Executive says companies targeted for their expertise
* Several companies say unaware of such Chinese demands
(Adds comments from ElringKlinger interview, company reactions,
By Edward Taylor and Samuel Shen
FRANKFURT/SHANGHAI, Aug 25 Three German car
parts suppliers have been told by China they can no longer
manage their Chinese units independently but need to form
partnerships with local peers, the chief executive of auto parts
maker ElringKlinger told a German newspaper.
Such a decision, if substantiated, would fit with an
increasingly tough stance adopted by China's competition
regulator, the National Development and Reform Commission
(NDRC), towards the foreign car industry.
It recently began to investigate foreign carmakers following
complaints that they were overcharging Chinese customers.
"The Chinese state has told several (German car) suppliers
that they are no longer allowed to operate their Chinese
subsidiaries on their own but only as part of a joint venture in
the future," ElringKlinger's Stefan Wolf was quoted as saying in
the Monday edition of Stuttgarter Zeitung.
Wolf said he knew of three companies that now needed to look
for a Chinese partner, but did not name them. He said
ElringKlinger had not been affected for now.
"If that were to happen, it would be an attack on
intellectual property. Fifty percent of the company is being
taken away -- this, effectively, is expropriation," Wolf said.
The companies targeted tend to have expertise in key
technologies, Wolf told the paper, adding that ElringKlinger had
already transferred a lot of know-how to its Chinese division.
"I believe this is an attempt to catch up on know-how and
innovation," he told the paper.
Foreign automakers like Volkswagen and Daimler
are obliged to form joint ventures in China, but
several overseas component makers have not been subject to the
Those companies have expanded their operations in China, the
world's largest auto market, and grabbed a bigger part of the
industry's value chain as car manufacturers cut back on research
and development to keep down fixed costs.
In 2012, suppliers spent 37 billion euros ($49 billion) on
research and development, equivalent to 69 percent of global
automotive research and development spending, according to
consulting firm Oliver Wyman.
As a result, their share of overall value creation in the
automotive industry is expected to rise to 81.1 percent by 2025
from 77.3 pct in 2012, according to the firm.
GERMAN COMPANIES UNAWARE
German auto parts maker Robert Bosch GmbH's China
unit said it has not received any notification from Chinese
authorities with regard to changes of foreign investment
policies related to the automotive component industry.
"We believe that foreign investment will continue to play a
vital role in China's economic development and foresee (an)
improving investment environment of fairness and open
competition in China," Bosch said in an e-mailed statement.
Bosch already has some joint ventures in China.
Continental, another major German automotive
supplier, said it had received no requests from the Chinese
authorities to form joint ventures. The China units of U.S.
engine maker Cummins Inc and France's Faurecia SA
said they were unaware of any policy changes.
A spokesman for automotive cable and wiring systems supplier
Leoni AG said it too was unaware of a current
request, but acknowledged that Chinese authorities had been in
touch about forming a joint venture in the past.
China last week fined a dozen Japanese parts makers a record
$201 million for manipulating prices, and European car brands
including Volkswagen, Audi, BMW and Mercedes are
scrambling to lower prices for new cars and spare parts to
appease Chinese regulators who have accused some of them of
Earlier this month, the European Union Chamber of Commerce
in China expressed concern over a recent series of antitrust
investigations, saying China, the world's largest car market,
was using strong-arm tactics and appeared to be unfairly
targeting foreign firms.
"Practices such as informing companies not to challenge the
investigations, bring lawyers to hearings or involve their
respective governments or chambers of commerce are contrary to
best practices," it said at the time.
Chinese investment bank China International Capital Corp
said in a report on Monday that the Chinese government, which
has the power to block foreign investments, was more likely to
urge foreign component makers to "voluntarily" seek Chinese
partnership during the approval process, rather than make
drastic policy changes in the short term.
(Additional reporting by Jan Schwartz, Andreas Cremer and
Christoph Steitz; editing by Tom Pfeiffer)