Ford finance deal unlocks China

One of China's top four state-owned commercial banks has agreed to provide finance to Ford car buyers.

A lunchtime crowd, some 100 strong, goggle at the three female bodies gyrating on a stage

Nick Mackie in Chongqing on China's private car market

The deal, with China Construction Bank (CCB), represents a major breakthrough for Ford in China, vastly improving its ability to sell cars in the world's fastest growing market.

Car makers are forced to enter into agreements with local banks to enable Chinese customers to buy their products because only commercial banks are allowed to offer auto financing.

Early this year, Bank of China said it would offer car finance for the local market leader Volkswagen's customers.

Other car makers are expected to follow suit as they desperately seek to enter this potentially huge market.

Angry

Many foreign car makers have already set up substantial manufacturing operations in China, often as joint ventures with domestic players.

Others, such as the Ford-subsidiary Volvo, are instead exporting to China.

"As China's car market is opening, competition has depended more on sales networks and after-sales services than on products," said Ong Eng Song president of Volvo's China operations.

But sales to the Chinese have been held back by the country's bureaucrats' reluctance to let global car giants offer auto finance.

The People's Bank of China has so far failed to inform the car makers about how their Chinese operations would be regulated, thus preventing them from fulfilling their subsidiaries' potential.

Such barriers to market entry have made the car makers angry because the Chinese had promised to fully open up its market when it joined the World Trade Organisation in December 2001.

The delays have enabled local car makers to develop.

Such Chinese car firms, which tend to make small, cheap cars, are quickly becoming powerful forces in their local market.

CCB is one of China's biggest lenders, operating tens of thousands of branches and sub-branches across the country.