Chinese auto brands have come up with reforms and strategies to deal with the upcoming challenges from foreign competitors and opportunities of an expanding market, Sohu News reported.   Since July 1, 2006, China’s import tax on sedans, passenger vehicles, and sports cars has been reduced from 28 percent to 25 percent and reduced on auto accessories from around 16.4 percent to 10 percent. International auto giants have invested more in China since 2002.   Characteristics of Chinese auto makers Strengthening auto production and industry structure has been the focus of domestic auto sector’s reforms. In 2001, China had 128 auto manufacturers which exceeded the total number of America, Japan and the European Union combined. However, only four Chinese manufacturers exceed the annual production objective of 200,000 units. The overall production was 25 percent of General Motors’.   Facing the pressure of entrance to the WTO, initial state-owned enterprises have gradually diversified corporate and capital structures to be more competitive. Larged-scale Chinese auto companies have become joint stock companies and placed the financing focus on overseas capital markets. Shanghai Automotive Industry Corporation (SAIC), Guangzhou Automotive Industry Corporation (GAIC), Beijing Automotive Industry Corporation (BAIC) and Dongfeng have established joint stock companies and have actively sought foreign listings. Dongfeng succeeded in Hong Kong listing last year and become the biggest listed-auto company in China.   WTO has bought great opportunities to the Chinese auto industry. Although Chinese auto export remains weak, it has undergone rapid growth in the past five years. In the 19 years from 1980 to 1998, prior to the entrance to the WTO, total exports amounted to 126,500 units, which were one tenth of the import at the time. In 2005, China’s annual exports totaled 173,000 units, which already exceeded the import level.   Foreign acquisition of Chinese auto market Currently, the major players of domestic auto manufacturing are such 9 companies as FAW, Dongfeng, SAIC and Guangzhou Honda. However, they are all under the shadows of multinational companies. Six multinational auto giants, including Ford, General Motors and Honda, have found Chinese business partners through joint ventures. They have nearly controlled more than 95 percent share of the market. Almost all the new technologies are in their hands. China’s auto manufacturers are merely manufacturing foreign auto models.   Major Players Volkswagen Volkswagen has 13 manufacturing subsidiaries around the world. Its primary subsidiaries in the Mainland are Shanghai Volkswagen and Audi. Its main products are Audi, Santana, Gol, Polo and Passat.   General Motors As the biggest player in China’s auto market, General Motors owns various labels such as SHMW, Buick, Changan Suzuki, Cadillac and Chevrolet.   Ford Ford’s major subsidiary in China is Changan Ford. Its labels include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo.   Rising Chinese brands National auto brands are not as competitive as foreign or joint-venture companies and have a series of difficulties to overcome: multinational companies take advantage of their networks to sell foreign labels at low prices; continuous price wars reduce national enterprises’ competitiveness and profitability; Chinese auto corporations are comparatively backward in technical aspects.   Red Flag Auto Red Flag Auto tries to combine foreign technology with its own innovations. Since 1992, Red Flag has launched a series of innovative sedan models that have proven to be very popular among consumers. Several lengthened sedan and luxury sedan models have become the top choices for business and public administration usages.   Chery Chery has four major auto models, namely Cowin, Fulwin, Eastar and QQ.  Cowin has become one of the most popular China-made sedans since its launch in 2001.  QQ has become a popular mini car.  Eastar targets the business market. By August 2003, Chery hit the monthly sales record of 10,000 units.   Foton Motors Foton is a listed company reflecting a modern corporate structure. It produces a range of commercial vehicles and brands, including Auman, AUV, View, Saga, Aumark, Ollin, Sup and Forland. In 2003, Foton ranked fifth in China in annual auto production and sales.