Pekín pone un badén pequeño a la expansión mundial de sus coches

Beijing is imposing strict regulations on the global expansion of Chinese cars. The authorities have issued new guidelines urging automobile manufacturers to refrain from practices that could disrupt competition abroad. Leading companies like BYD, valued at $113 billion, and their rivals likely believe they cannot afford to slow down their international expansion.

The Ministry of Commerce released a series of recommendations on Tuesday to promote healthy and orderly growth for the sector, ranging from better quality control to avoiding frequent price changes that may harm consumers or damage brand image. This unusual official acknowledgment suggests there may be a need for fundamental rules.

The support of three public institutions adds weight to the guidelines. The directives came from the Ministry of Commerce, the Ministry of Industry and Information Technology, and the State Administration for Market Regulation. However, the absence of penalties for non-compliance is noteworthy. Given that regulators have struggled to curb destructive price wars in the domestic market, it is unlikely they will succeed in foreign markets that are absorbing China's excess capacity.

One reason could be that an overly aggressive crackdown on manufacturers would endanger too many production lines and jobs. Meanwhile, automobile sales in China are declining. First-half deliveries dropped by 2.3 million compared to the same period last year, equating to the loss of a market the size of Japan, according to Reuters calculations.

It's no wonder executives are accelerating their international push: monthly sales data show BYD and Geely Auto doubled their exports in August compared to the same month last year. BYD exported 189,466 new energy vehicles in August, while Geely Auto sold 110,094 units abroad, a 205% increase year-over-year. Even brands like Xiaomi and Li Auto, which previously prioritized the Chinese market, are now preparing expansion plans.

Total exports could reach 10 million vehicles for the year, according to Alix Partners' forecasts, about 20% more than in 2025. Exports are also more profitable, as brands take advantage of higher prices in wealthier markets like Europe. BYD's net profit margin per vehicle sold and shipped abroad reached 20,000 yuan ($2,567 at current exchange rates), almost 10 times more than its Chinese models.

The company is also opening new factories worldwide, which should further bolster its international presence. As foreign markets become vital to offset domestic revenue declines, manufacturers will be highly motivated to exploit similar and aggressive strategies that they employed in China to gain market share. Severe action will likely require a much bigger cushion.

The authors are Reuters Breakingviews columnists, and the opinions are their own. Translation by Carlos Gómez Abajo is the responsibility of CincoDías.