Tesla to open its first overseas factory – in China

World Today

Reform and opening up have made Shanghai’s Free Trade Zone very attractive to foreign capital. U.S. electric automobile-maker Tesla is one of those companies, and is set to open its first overseas factory there. CGTN’s Han Peng reports.

When it comes to opening up its market to foreign companies, Washington has accused Beijing of sanctioning the theft of U.S. intellectual property; forcing U.S firms to transfer technology in return for access.

But that’s not an issue for one U.S. automaker.

Last month, Elon Musk, CEO of the U.S. car brand Tesla, visited Shanghai and announced the opening of its first factory outside the United States.

If a foreign car brand wants to open a factory in China, it has to set up a joint venture with a local automaker. First Automotive Works, for instance, is called FAW-Toyota. It’s a 50-50 split in ownership.

But Tesla’s new factory is 100 percent owned by Tesla. It’s the first car factory in China owned entirely by a foreign company.

The credit goes to the Shanghai Free-Trade Zone, a five-year-old testing ground for Chinese economic reforms to open the country’s markets further to foreign companies.

According to Huang Ou, the deputy director of the Shanghai Municipal Commission of Economy and Information, “This is a pilot project by Shanghai to reflect the central government’s call for the removal of foreign equity limits in the automobile manufacturing industry.”

Some said China is using the access of its huge market as leverage to force Western car brands to give away some of their intellectual property, a claim China denies.

“As to technology transfers, it’s a company matter,” Huang Ou said. “We don’t have any intentions to make regulations.”

Tesla is the largest foreign investment project for Shanghai. The new factory aims to produce more than half a million electric cars a year. This move comes despite the ongoing trade tensions between China and the United States.

Analysts say if Tesla proves successful in the Shanghai Free-Trade Zone, it’s hoped other independent U.S. businesses will be allowed into China.