A worker checks liquefied natural gas (LNG) cylinders at an auto parts plant in Rizhao, East China's Shandong Province. Photo: IC

Two major German automotive suppliers on Monday denied a media report which claimed that the Chinese authorities have asked the companies to give up sole control over their units and form partnerships with their Chinese counterparts.

Reuters reported Sunday that three German car parts suppliers have been asked by Chinese authorities to form partnerships with local peers, and lose their independent control of their units, citing a German newspaper.

Stefan Wolf, chief executive of ElringKlinger, a German company that makes auto parts such as cylinder-head and specialty gaskets, was quoted by the Stuttgarter Zeitung as saying three German suppliers are no longer allowed to operate their Chinese subsidiaries on their own but only as part of a joint venture (JV) in the future, the report said.

Wolf said his company had not been affected, and did not say which the three companies could be, it said.

A staff member with the PR department of the Chinese branch of German auto parts maker Continental AG who declined to be named told the Global Times Monday that her company had not heard about any such directive at the moment.

She further went on to explain that among the many units of Continental in China, some are solely owned subsidiaries, while others are JVs. 

"And the JV partners are not restricted to State-owned enterprises. They can be private companies or government units such as the administrative committee of an economic development zone," she said.

The China unit of another German auto parts maker Robert Bosch GmbH also said it has not received any notification from Chinese authorities on the issue.

"We believe that foreign investment will continue to play a vital role in China's economic development and foresee [an] improving investment environment of fairness and open competition in China," Bosch said in an e-mailed statement sent to Reuters on Monday.

The German Chamber of Commerce in China told the Global Times Monday that they did not receive any news on the matter. China's Ministry of Commerce was not available for comment by press time.

Wolf said the scheme, if carried out, would require the Chinese partner to take 50 percent of the unit formerly owned by the foreign auto part maker, and become "an attack on intellectual property," according to Reuters.

China, the world's largest car market, has become a battleground for auto parts makers. The National Development and Reform Commission (NDRC), China's pricing regulator, has recently conducted anti-monopoly probes to some foreign auto parts manufacturers following complaints that Chinese consumers are overcharged for the spare parts.

Han Bing, CEO of Beijing-based chetour.com, said the auto parts market is characterized by high level of monopoly.

"The niche market of electrical parts, for instance, has been dominated by Bosch and Siemens. Even the cheapest homegrown auto brands will procure products from these two suppliers," Han told the Global Times Monday.

Drawn by huge market demand and fat margins, the world's auto parts makers have been rushing into the ­Chinese market during the past few years.

According to a report released Thursday on news portal qianzhan.com, the number of auto parts suppliers exceeded 10,300 in 2013.

With a head count accounting for less than a quarter of the total, foreign suppliers accounted for 51.43 percent of the gross profit and 42.57 percent of the sales revenue of the sector in 2013, according to the report.

"A large part of the automotive technology advancement is driven by innovations in auto parts technologies. This is where Chinese auto parts lag behind," Han said.

"To meet consumers' demand for more reliable performance, many homegrown brands such as Great Wall Motor and Geely are also leaning toward procuring more parts produced by foreign auto parts makers and their JVs," Han noted.