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China Grants Approval for New Ford Plant

11 July 2000

    Beijing  - Ford has the official seal of approval from the State Economic 
and Trade Commission in Beijing to press ahead with construction of a US$80 
million car plant in a joint venture with Chongqing Changan Automobile Group, 
a leading Chinese automaker. Production could start within about two years.

    There are a couple more bureaucratic hurdles to negotiate - the feasibility 
study now underway has to be approved by the State Development Planning 
Commission and the foreign trade ministry regulates the formal establishment 
of joint ventures, but these are seen as formalities now that Beijing has 
given a green light - so Ford is sensibly adopting a cautious line.

    "The letter of proposal is approved by the ministerial level of the 
government," said a Ford China spokesman. "But this is only a part of a 
long process of preparation to form a joint venture as required by the 
Chinese government."

    The car venture represents a giant stride for Ford in China where until now 
its sole production interest is a 30% stake in truckmaker Jiangling Motor Corp 
in Jiansxi Province, which turns out Transit vans adapted for local conditions. 
It also has half a dozen components and service joint ventures.

    Ford officials concede they are lagging well behind Volkswagen A.G., Toyota 
group, General Motors and Honda in China but say they are looking at the long 
term. They expect the new joint venture to have developed into a major operation 
by the time the Chinese car market really begins to take off about a decade 
from now.

    Some reports say the 50/50 plant will build sport-utilities and MPVs based 
on Ford's mid-sized C-195 platform but Ford officials say it is too early to 
make a final decision.  Changan officials are a little more forthcoming, 
indicating that the new plant would be located in the city of Chongqing and 
produce cars costing in the region of  $12,100 US.

    Changan says its relationship with General Motors affiliate Suzuki would be 
unaffected by a Ford tie-up. Changan is expected to build 200,000 vehicles this 
year, most of them based on the Suzuki Carry and Alto minivehicles, against 
168,000 in 1998. Suzuki, for its part, says it is on course to start building 
a 1.0-liter four-door model with Changan beginning in August.


Source: Auto-Asia Online