Renault Looks to Re-enter China in Joint Venture with Dongfeng
By Prasanth Aby Thomas | November 26, 2012 5:22 PM EST
French automobile firm Renault plans to tie-up with China's second largest automaker, Dongfeng Motor Group Company, in a bid to manufacture cars in the Communist nation.
A Reuters report, citing Chinese publication China Business News, states the two firms are planning a combined investment of 6.5 billion Yuan (£651m) in a factory in the central province of Hubei, with an initial annual capacity of 200,000.
This is not the first time Renault has ventured into China. In the mid-1990s, the company tied-up with a lesser known state-owned firm that manufactures special purpose automobiles.
The chief executive of Renault Greater China, Chen Guozhang, reportedly said the new alliance would take up a plant Renault used to operate during the earlier joint-venture. Guozhang added the company did not require a new production license from the Chinese government, as it could use the one from its previous tie-up.
Renault is one of a small number of foreign carmakers who market exported cars in China at the moment but the response from consumers in the country has been disappointing.
A Dongfeng spokesman said he was not aware of any decision regarding the tie-up while a spokesperson for Renault in China has refused to comment, Reuters said. The former already has partnerships with Japanese carmakers Nissan Motor Co and Honda Motor Co and the French firm PSA Peugeot Co.
Foreign automobile firms manufacturing vehicles in China can operate only through partnerships with local firms. The country is presently the world's largest automobile market and global carmakers are vying to grab a piece of it.
However, the Wall Street Journal reported, citing research from McKinsey & Company, increasingly affluent Chinese consumers will prefer high-end cars in the future, shrinking inexpensive vehicles to one-third of the market by 2020.
But this bleak forecast is not expected to deter foreign firms from China, where growing urbanisation is expected to increase the need for mobility.
Shares of Dongfeng gained 6 percent in the morning trade.
To contact the editor, e-mail:
Most Popular Slideshows
- Still The World Champions: Team USA Overpowers Serbia, 129-92 To Win 2014 FIBA World Cup [PHOTOS]
- After Win Over Maidana, Mayweather Says He Is Prepared To Negotiate A Fight With Pacquiao
- From Fat To Fit: Celebrities Who Were Overweight Before They Became The Beauties That They Are
- USA Defeats Lithuania, 96-68; Americans Advance To Championship Round Of 2014 FIBA World Cup [PHOTOS]
Join the Conversation
- iOS 8 Release Date Of Sept 17 Has Arrived: Update Begins At 10AM Pacific Time, Upgrade Your iDevices With iOS 7.1.2 First To Install iOS 8
- Why Samsung Galaxy S5 Is Not The Best Smartphone To Purchase Now? If You Still Want To, Wait For A Month To Get It Cheap
- Apple iPad Air 2, iPad Mini 3 October Release Date Roundup: Freshly Leaked Protective Case Debuts Unique Vent Alongside Camera
- Google Nexus 8 Release Date Countdown Begins Oct 8: 8 Killer Specs and Features to Expect
- Canadian IS Jihadist Wants to ‘Play Soccer’ with Heads of US Decapitated Soldiers
- Warning to U.S. – ISIS Has Shot Down a Syrian Regime Fighter Jet
- Spice Dream Uno vs Xiaomi Redmi 1S: Android One Smartphone to Challenge The Existing Budget Friendly Smartphone