China approves Honda's car export venture

SHANGHAI, Nov 15, 2002 Reuters reported that China has approved a plan by Japan's Honda Motor Co to set up the first Sino-foreign joint venture to make cars solely for export, executives at one of the Chinese partners said on Friday.

Japan's second largest automaker would own more than 50 percent of the venture, marking the first time China has allowed a foreign company to own a controlling stake in an automaking tie-up, officials at Guangzhou Auto Group Corp said.

"The plan has been approved by the State Development Planning Commission," said one official. "We cannot disclose more information as many details are still under negotiation, such as when we will start the venture."

Officials declined to give a detailed breakdown of shareholders, but they include Dongfeng Motor Corp, China's second largest automobile producer.

Foreign automakers are rushing into China's fast-growing automobile industry, which is expected to pump out more than one million cars for the first time this year, up from just 703,500 last year.

An official newspaper said on Friday Honda had been allowed to take a controlling stake in the venture partly because it would be export-oriented and thus not expected to have major impact on domestic markets.

Honda announced its China venture plan in July, saying it aimed to begin building a small plant with an initial capacity of 50,000 cars a year, to be exported to Asia and Europe.

The Japanese giant already operates a 50-50 venture with Guangzhou Auto, which has been making Accord sedans and Odyssey minivans since 1998.