Thursday, October 03, 2002
CORPORATE
Nissan’s China Venture May Start Truck Exports In Two Years
Tokyo, October 2: Nissan Motor Co Ltd said on Wednesday that its planned $1 billion joint venture with Dongfeng Motor Corp, China’s second-largest auto group, could be exporting trucks within one to two years.
“Selling trucks overseas is a definite possibility and could come, at the earliest, in one to two years,” Mr Katsumi Nakamura, senior vice president in charge of China operations, told reporters.
Mr Nakamura said, however, that export volumes would be initially small as most trucks built by the venture, which also plans to build passenger cars, would be absorbed by the rapidly growing Chinese market.
“Embarking on exports is important in that you learn your markets, and in that the company is setting itself goals to raise quality and to improve distribution,” he said.
There are no plans at present to export passenger cars, he said.Dongfeng already exports trucks to developing countries, although less than 1,000 units per year.
The new company would also export to developing countries where cheaply built Chinese-made trucks could compete on price, Mr Nakamura added. The ambitious 50-50 venture between Japan’s number three automaker and Dongfeng aims to roll out 550,000 vehicles by 2006, and become a globally competitive player with production capacity of 900,000 vehicles within 10 years.
It is regarded as one of the boldest forays by an automaker into the Chinese market, not only because of Nissan’s hefty $1 billion investment but also because the new venture will assume nearly all auto assets of Dongfeng. Nissan will nominate half of the eight-member board including the chief executive of the venture, with those members likely to come from Nissan. Dongfeng will provide the chairman. Pacts by other foreign automakers have been more limited inscope, focusing on specific market segments like passenger cars.
The deal has raised doubts over whether Nissan will get its money’s worth over the long term and whether the Japanese automaker will be able to turn around the corporate culture of a former state-run Chinese enterprise. Analysts also point out that 50-50 ventures by nature tend to be uneasy partnerships and those in China may one day fall apart as Chinese automakers grow in skill and yearn for independence.
Mr Nakamura said, however, that while there would likely be problems, Dongfeng is expected to depend on its Japanese partner as it learns new manufacturing and distribution skills over the next 10 years.
“It will also take a fair amount of time before the Chinese side could develop the expertise in car research and development on their own, and I think they know that. There has to be give and take on each side.” He added the Chinese government likely chose Nissan because of the successful alliance between Nissan and Renault SA. — Reuters
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