Older Chinese generations have special feelings toward the domestic automobile brand Hongqi, which means "red flag" in Chinese.
The Hongqi brand belongs to China First Auto Works, which can be traced back to 1958. Its limousine series were the first domestically-made passenger vehicles. They were chosen as official sedans for Chinese leaders and visiting foreign dignitaries. But in the 1980s, this Chinese luxury car fell out of fashion due to its high fuel consumption.
News released on Monday revealed that Wang Yi, China's Foreign Minister, changed his official vehicle to a Hongqi H7, a homemade sedan launched this May and priced between 299,800 yuan ($48,897) and 479,800 yuan. The news rekindled the public's enthusiasm for this brand which is steeped in Chinese automobile history.
The market for domestic brands received a boost from this news. China First Auto Works saw its stock price rise by 1.73 percent on the day the news was released. It is estimated that expenditure on official cars in China amounts to $13 to $16 billion a year. But in China's auto market, foreign brands account for over half the market share, and this share is even larger in the high-end market.
As early as four years ago, it was requested that at least half of the vehicles procured by the government should primarily consider domestic brands. Last year, the Chinese Ministry of Industry and Information Technology issued a list of vehicle models for the Party and government organs and most of the models on the list were domestic brands. Nevertheless, foreign brands still represent a considerable share because they are viewed as status symbols in many people's eyes. The foreign minister's choice of vehicle is expected to encourage more officials to buy domestic vehicles.
Meanwhile, Hongqi should be prevented from being deemed as a label specifically catering to officials. Besides Hongqi, other Chinese brands should also be included in the vehicles for official use. Hongqi will naturally be given more attention due to the foreign minister's choice. But making it the designated choice of public service vehicle would affect the playing field among domestic brands and the significance of reforms to public service vehicles.