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Hyundai to Form Car JV in Beijing
Beijing Automotive Industry Corp said last week it was in talks with South Korea's biggest automaker, Hyundai Motors, to create a passenger car joint venture in Beijing, but there is no specific plan yet.

The Beijing company's comments follow recent foreign and domestic reports that the two sides have reached an agreement to form a 50-50 joint venture with a annual production capacity of 100,000 units.

These reports said Hyundai had planed to invest US$250 million in the expected joint venture, to begin production this October.

But the Beijing company said there is no final deal yet.

The Beijing company is likely keeping a low profile since the joint venture project with Hyundai is still awaiting a nod from the central government.

Top officials from the State Economic and Trade Commission and the State Development Planning Commission, the two influential divisions in China's cabinet in approving Sino-foreign joint venture projects, recently inspected the Beijing company.

The struggling company has had a strong desire to team up with Hyundai, to enhance its strength amid growing market competition now that China's entry into the World Trade Organization.

Dong Yang, general manager of the company, said one of its top priorities this year was to work with foreign companies, especially Hyundai, to introduce new products, improve competition and meet the increasing demand from the 2008 Olympic Games and from overseas markets.

"We will gain a new development momentum as long as our joint venture project with Hyundai is approved and we will choose proper products,'' Dong said.

The Beijing company and Hyundai were expected to reach the joint venture deal "in the near future,'' he said.

Currently, the Beijing company has a joint venture with German-US auto giant DaimlerChrysler, producing Cherokee sport utility vehicles.

But that joint venture remains a big loss-making arm of the Beijing company, although the two parents agreed in late 2000 to inject US$226 million and extend its term by 30 years to 2033.

Dong said the Beijing company aims to increase its sales to 150,000 units this year from 136,500 in 2001.

The company is also manufacturing pickup trucks and recreational vehicles.

Analysts say Hyundai's plan to set up a joint venture with the Beijing company is in an attempt to make a firm foothold in China's passenger car market.

Hyundai, 10 percent of which is owned by DaimlerChrysler, is coveting the tremendous potential of China's auto market.

A high-ranking executive of Hyundai said demand for vehicles in China would surge before the 2008 Olympic Games, which will be held in Beijing.

At present, Hyundai is cooperating with a Chinese auto maker in East China's Shandong Province to produce sport utility vehicles.

Hyundai's Kia also holds a 40 percent stake of a three-way joint venture in East China's Jiangsu Province, producing Pride compact cars.

The two other partners are Jiangsu Yueda Motor Co and Dongfeng Motor Corp, based in Central China's Hubei Province.

(eastday.com February 26, 2002)

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