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Financial Crisis Delays Volvo Truck Plans in China

30 May 2000

     Beijing - Last year, Volvo Truck Corporation thought they had a deal 
with state-owned China National Heavy-duty Truck Corporation to build a 
$480 million vehicle production plant.  However, the China State Council 
blocked the plan after deciding that the domestic market could not support 
the 20,000 heavy trucks that Volvo planned on producing each year.

     Volvo Trucks then submitted a scaled-back plan that projected only 
about 12,000 trucks per year - at an investment of $200 million.  This 
proposal was formally approved by the State Council last December, and 
everything looked like it would finally move forward.

     However, the State Council has now blocked the slimmed down project 
and is asking for a new amended plan.  At fault is an outstanding $720 
million debt owed by the China National Heavy-duty Truck 
Corporation.  Beijing will only allow a deal to proceed if CNHTC can 
restructure the debt.  CNHTC officials stated that the deal is not 
cancelled but that it could be delayed until next year.  Volvo officials 
said they were was unaware of the seriousness of the financial situation 
because of differences in Chinese accounting procedures. 


MJR