BMW China is unable to remit profits from China, rumor refuted by many parties

BMW China is unable to remit profits from China, rumor refuted by many parties

I believe most people know that the profits of joint ventures and imported car companies are much higher than those of domestic brands. For the same level of car, FAW-Volkswagen's Sagitar can be sold for 218,800 yuan, while Geely Auto's Emgrand GL can only be sold for 113,800 yuan. The extra money is partly due to cost factors, but more of it is profit. Where do all these profits go?

Facts show that China, the world's largest automobile market, delivers huge profits to foreign companies entering China every year, directly or indirectly helping these companies to further invest around the world. What would happen if more of these continuous foreign exchange flows stayed in China?

BMW China cannot remit profits, rumor refuted

On the afternoon of February 26, the verified microblog user "断线红风筝" posted a microblog saying: I got a message that the sales profit of BMW China has not been remitted since November last year, for more than four months. Now HSBC is relying on HSBC to advance funds to BMW's foreign suppliers, and they have been told that they can only last for six months at most. Similar situations have been common in other foreign companies, and anxiety is spreading.

As of now, the original Weibo post by "The Red Kite with Broken String" has been deleted. Many non-official sources have refuted this information. A blogger who claims to be a banker, "Chujiuzhichu", posted a Weibo post to "refute the rumor": Our bank has recently handled BMW's profit remittance and foreign exchange purchase. Does anyone believe it? It is better for the person involved to speak out on Weibo.

Sang Zhiwei, a well-known automobile analyst, said: "I asked other car companies, and they currently remit money once every three months. There is no such thing as being unable to remit money."

Blue Whale Auto consulted relevant persons from BMW China regarding the issue of "BMW China's profits in China facing restrictions on remittance", but no official response was received as of press time.

Joint venture car companies take 95% of the profits

Data shows that in 2016, BMW Group's annual sales in the Chinese market exceeded 500,000 units, with a total of 516,355 units sold (including MINI brand), an increase of 11.3% year-on-year, accounting for more than 20% of global sales. China has become the largest single market for BMW Group and BMW brand sales, and also occupies an important position in terms of operating income.

At present, the equity ratio of most domestic joint venture car companies is 50:50. Does that mean that the profits of the Chinese and foreign parties of the joint venture car companies are "equally shared"?

A report by Beijing Evening News in 2013 showed that the "2013 Industry Blue Book" released by the Institute of Economics of the Chinese Academy of Social Sciences pointed out that although China has become a major automobile production and consumption country, it is mainly in the assembly and parts manufacturing links in the division of labor in the global industrial chain. In 2011, more than 95% of the corporate profits of China's independent brand passenger cars were earned by joint ventures.

Analysts pointed out that most of the Chinese parties in joint venture car companies do not have the core technology of automobile manufacturing, and the most profitable parts of the car are core components such as the engine and gearbox. Most of these components are wholly foreign-owned or imported. This is the main reason why most of the profits of joint venture car companies are taken away by foreign parties.

Foreign exchange market supervision will be strengthened

Although "many parties" have denied that BMW's profits in China cannot be remitted, it is one of the country's unchangeable policies that it will crack down on foreign exchange violations and irregularities.

On February 26, CCTV News reported:

The State Administration of Foreign Exchange has recently investigated and dealt with a number of foreign exchange violations. Six companies in Shenzhen were suspected of violating laws in their foreign exchange receipts and payments. After further investigation by the police, a case of an underground bank involving nearly 50 billion yuan was uncovered. In addition, it was found that many companies used false documents and fictitious trade to evade foreign exchange; many individuals used the "ant moving" method, suspected of money laundering and illegal transfer of assets.

The State Administration of Foreign Exchange said that this year it will strengthen supervision of the foreign exchange market and crack down on foreign exchange violations and irregularities to maintain my country's balance of international payments. At the same time, it will also enhance policy transparency and promote the continued opening up of the financial market.

Pan Gongsheng, director of the State Administration of Foreign Exchange: "We will continue to promote and support the two-way opening of financial markets, further enhance the level of facilitation of cross-border trade and investment, and better serve the real economy." Pan Gongsheng said that the current situation in my country's foreign exchange market is relatively stable, and cross-border capital flows are also tending towards balance.

In line with the country’s industrial policy, on December 9 last year, a report from the Ministry of Commerce from the “Commercial Office of the Consulate General in Hamburg” showed:

Based on the above information, the fact that BMW Group’s profits in China “cannot be remitted” is still worthy of attention from industry insiders in terms of the overall development pattern and trend of China’s automobile industry.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.

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