Licenses for the operation of telematics services

The Chinese government keeps close control of the emerging OE telematics industry through a complex network of licensing requirements. These licenses are operated by the Ministry of Industry and Information Technology (MIIT) focused on telecommunications-related licenses and the State Bureau of Surveying and Mapping (SBSM) responsible for the new Internet-based mapping licensing.

The MIIT is responsible for a wide range of licenses related to Value-Added Telecommunications Services (VATS). These VATS include the licenses critical for OE telematics services. Restrictions on foreign companies gaining these incenses are a major obstacle for vehicle manufacturers planning to launch telematics services in China.

The process of complying with the Chinese government’s licensing requirement is complex and difficult. Vehicle manufacturers are developing a number of strategies to address the situation:

- Obtain licenses through joint ventures and financial strategies that attempt to get around foreign ownership laws

- Outsource telematics to Chinese service providers

- Attempt to avoid the requirement of some licenses by offering services for free

- Choose specific telematics services that have a reduced licensing requirement

Legislation mandating the introduction of telematics services

While the Chinese government’s licensing requirements are having a restrictive effect on OE telematics, other legislation is set to encourage the deployment of automotive services. In the short term, the Chinese government has introduced new legislation mandating the monitoring of new-energy vehicles (such as electric vehicles) that may lead to the fitment of remote diagnostics telematics systems. In the longer term, SBD has analysed the likelihood of the introduction of legislation relating to four telematics services: eCall, Road Pricing, Stolen Vehicle Tracking (SVT) and Electronic Vehicle Identification (EVI). Of these four, EVI is identified as the most likely to generate legislation.

Improving communications between industry and the government

Vehicle manufacturers are averse to new unexpected government legislation, such as the SVT mandate in Brazil that surprised some car makers and is causing high costs to ensure compliance. SBD believes there is an opportunity for vehicle manufacturers to avoid unexpected legislation and influence government thinking in China through the emergence of new telematics industry alliances such as the national Telematics Industry Application Alliance (TIAA) and the regional Shanghai Telematics Information Service Alliance (STISA).

For more information on "The Great Wall - Overcoming legislative obstacles to telematics in China" report, contact Juanita Appleby on jappleby@sbd.co.uk