Can a planned economy build great brands? The history of the Chinese auto industry suggests not. Domestic brands’ market share has fallen five percentage points year to date to less than a third. On Monday, China found Mercedes-Benz guilty of price fixing.

These facts may not be related, but regulation in China’s auto market has long been aimed at supporting local names. In the early days, state planners decreed that foreigners must go halves with a local partner on any auto venture. This policy did not lead to the hoped-for transfer of technology and management knowhow. State-owned enterprises and their foreign partners alike found it easier to make money just letting foreigners get on with it.

Thus, from the mid-2000s, the government tried a different tack. This time, foreign partners were encouraged to develop an entirely “local” brand for transfer to the domestic partner. Foreign carmakers used the opportunity to introduce a lower-priced brand based on older overseas models. The ironic result has been to undermine the proper homegrown brands – Geely, Chery, Great Wall and BYD – whose cars had previously dominated the lower end of the market.