FORMATION CHINA LEGAL AND REGULATORY OVERVIEW

World’s n° 1 automobile market

28.1 M vehicle sold in 2018,

14% ownership rate => great potential mainly SUV

No automotive culture in China, people are new for the auto business, their parents, relative didn’t
had car. It is the1st generation of client

Need to fight hard to be visible.

Level of quality is very high now & fast developing.

China is 1 of the mostly regulated market in the World.

Parking restriction, technical ones, business restrictions …

Electric vehicle is a Chinese devpt target with vehicle hyper connected

Autonomous driving makes sense due to local infrastructures

- Not the same type of regulations than European ones.

- All the JVs are caped below 50% because of Foregn Investment Regulations.
- NDRC (National Devpt & Reform Committee)
- Ministry of Commerce = MOFCOM
- State Administration for Market Regulation (AMR) which defines the specific purpose of the
project + competition Clearance
- Homologation by MIIT (Ministry of Industry and Information Techno)
- SASAC (Stae-owned …)– Investors need to team-up with local Partners – Specific procedure
to transfer assets to Renault.

 Foreign Investments Restrictions:

1. Number of PV (Passenger Vehicle) / CV (commercial veh) license restrictions by OEM

- this license restriction will be fully removed in 2022

2. Shareholding Limits :

- no restriction for E.V. can be owned at 100% by foregn capital

- this restriction will be completely removed in 2022

3. Chart of participations of main JVs

4. Product Liability

Evolution of legal framework is globally quite positive

Very highly regulated country but the situation is improving a lot and being closing & closing like
Europe or US.

However, SASAC and Foreign exchange control will not change dramatically in next years

A reaction is expected very fast in China because information is spreading very quickly through social
networks.

Recall campaign shall be done very quickly

Civil liability: joint rc for manufacturer + dealers. Absolute RC similar to the characteristics in Europe.

Criminal liability is very rare (only dangerous products on a willful conduct)

Administration liability because administration is very powerful – Penalties can be very high

Antitrust notification in China

Tresholds imposing a notification to MOFCOM

Favorable learning curves

2 kinds of procedures:

 Fastrack procedure when operation does not raise high competition issues – Filing through
the website of MOFCOM – For instance, the last approval was obtained just in 10 days
because pre-meeting was hold with the authorities on an informal basis.
 Standard procedure when market share are above the threshold t be eligible to fastrack.
3On average, authorization is obtained in 30 days from acceptance of the file by MOFCOM.
Phase 2 only for the highest scale operations.
 On past few years very few operations have been refused.
 Discussions are more & more professional
 A lot of concept used by MOFCOM are inspired from EU antitrust authorities
 Reaction of authorities is more & more previsible

Closer and closer to European practice

Obligation to suspend any operation before getting clearance

Authorities may not feel as bound to previous decisions as EU authorities may be ?

Very fast decisions (fastrack)

The more difficulties were experioences for the Innovation Lab because no figures available in
relation to autonomous driving nor size of the market. Thus long time discussions ith MOFCOM

May be Red, Blue or yellow in China

IP

Before: was a real nightmare

Now : this situation will improve in the sense of less constraints to get back improvement deriving
from background IP rights.

Keep consistency in terms of IP through whole Chinese territories and JVs

When you license techno you cannot prevent the partner to use your background right

License for maxi 10 years

OVERVIEW OF CHINA FUEL CONSUMPTION REGULATIONS

Chinese authorities have 2 main objectives:

- limit crude oil dependency (Fuel Consumption “FC” limits in 2005 & then CAFC Regulation in 2012)

If you do not comply with those limits, cars cannot be sold.

- be a leader in electrified vehicles.

Trends:

1. Continuous severization of FC targets – Higher ambitions in Fuel consumption ambition than

Europe
2. Boosting of EV markets & reduction of thermal vehicles