This article first appeared in The Edge Financial Daily on August 20, 2018

HANGZHOU: China’s home-grown carmaker Zhejiang Geely Holding Group Co Ltd (Geely), which owns a 49.9% stake in Proton Holdings Bhd, had proven itself in terms of technology and quality, said Prime Minister Tun Dr Mahathir Mohamad.

Having Geely on board will help accelerate Proton’s improvement, said Dr Mahathir, as he noted that the automotive industry is highly competitive and players are competing in terms of technology and quality.

Speaking at a press conference after witnessing the signing of a heads of agreement between Proton and Geely on Saturday, Dr Mahathir said Geely had overtaken Proton even though the latter had a longer history.

“There has been a tremendous improvement in the quality of Chinese cars over the years. When Proton started in 1983, Geely was nowhere [to be seen]. We sent six Proton cars here at that time,” said Dr Mahathir, who is on a five-day official visit to China.

The heads of agreement signed by Proton and Geely is to form a joint venture for Proton to sell its cars in China. Proton intends to set up a plant in China for the plan.

Dr Mahathir said Proton had not been able to expand its export market due mainly to its cars not being Euro 5-compliant.

Meanwhile, he said, Proton had difficulty in entering the Chinese market as the brand does not produce left-hand drive cars. On top of that, he added, the cost of production is lower in China, compared with Malaysia.

In response to questions raised by Chinese media about the government grant given to Proton, Dr Mahathir said it is common practice worldwide for governments to help industries that are in their infancy, and that Malaysia is not the only country that practises it.

In his opinion, the grant given to Proton previously was “minimal”. It was too little and, as a result, Proton’s research and development activities were hindered.

The prime minister, who has been passionate about developing the domestic automotive industry at home, also admitted that the Malaysian market is not big enough for a national car to achieve economies of scale, as others do in their respective home markets.

Nevertheless, he reiterated his view that the government had not given the support needed by Proton. “There was not enough government support.”

Geely took the opportunity during Dr Mahathir’s visit to the automaker’s headquarters on Saturday to show him its in-house technologies. The 93-year-old prime minister also test-drove three of the latest models of the Geely stable and met up with Proton staff who had been sent here for training.