LOCAL BRANDS FAIL TO CONVINCE

Criticism has intensified as some state-owned automakers and their joint venture partners launch so-called self-developed local-brand cars. The cars are no more than low-priced, rebadged and relaunched versions of foreign-brand models that just went out of production.

Examples are the Everus S1, which is based on the Guangzhou Honda City, the Venucia D50 based on the Dongfeng Nissan Tiida, or the Ciimo based on the Dongfeng Honda Civic.

Ironically, dealers of the Ciimo in Beijing changed the car's new logo back to Honda's "H" to boost sales because customers prefer foreign brands to real domestic ones, which have a poor reputation for quality.

Though some said that relaunching foreign-brand models as local-brand ones complied with government policy that aims to push foreign companies to transfer technology, many doubted that using old-fashioned foreign technology for "self-developed" cars could provide any long-term benefit.

Without self-owned technology, the Chinese would have to continue depending on foreigners to launch future generations of these cars, they said.

"This is corruption because the policy is made to favor foreign automakers, but not local ones," said Rao Da, chief of the China Passenger Car Association and son of the man who headed FAW in Mao's time. "How come we were able to design and manufacture the luxury Red Flag limousine in the 1950s but needed to import steering technology for mid-sized trucks in the 1980s?"

He believes that using foreign technology wherever possible discourages Chinese technicians from improving and that is why big state-owned automakers have so far failed to stop their own brands losing ground.