Geely gears up for future

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Last updated at: (Beijing Time) Friday, October 17, 2003

Geely gears up for future

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Privately owned car manufacturer Geely on the Chinese mainland and Guorun Holdings Ltd, its partner in the Hong Kong Special Administrative Region, have clinched two deals to form a new joint venture and to add extra investment to their existing joint venture.

Guorun's wholly-owned subsidiary, Value Century, and Shanghai Maple Automobile --- one of Geely's three manufacturing bases, will set up an auto joint venture in China's major economic powerhouse of Shanghai, according to a statement made to China Daily from the two parent companies.

The total investment in the joint venture, named Maple Guorun Automobile, will be 525 million yuan (US$63.25 million), the statement said.

Value Century and Shanghai Maple control 46.8 and 53.2 per cent stakes of the joint venture respectively.

The joint venture will produce Geely's own-brand Gale Wind and M203 economy cars.

Geely, whose headquarters is located in Hangzhou, capital of East China's Zhejiang Province, plans to enlarge the joint venture's annual production capacity to 300,000 units by 2010 from its current level of 40,000 units.

Guorun is a Hong Kong-listed investment firm.

Centurion Industries, another wholly-owned affiliate of Guorun, has also agreed with Geely to increase the investment in their existing joint venture in Ningbo, a port city in Zhejiang Province, to 1.127 billion yuan (US$135.78 million) from 200 million yuan (US$24 million), according to the statement.

The equity structure of the joint venture, Zhejiang Geely Guorun, will remain unchanged with Geely holding 53.2 per cent and Centurion Industries retaining 46.8 per cent.

Zhejiang Geely Guorun was set up in May this year.

The new investment will be used to produce Geely's self-developed Beauty Leopard, the first Chinese-made sports car, and engines and gearboxes.

The Beauty Leopard will be launched on the market in December this year.

The joint venture is making Geely's Merrie and Ulion economy cars.

In addition, the Ningbo-based joint venture has signed a memorandum of understanding with Primustech Ventures --- another investment firm in Hong Kong --- to co-operate in automobile sales and after-sales services, according to the statement.

Primustech has also entered into a memorandum of understanding with Ningbo Mingtai Automobile Sales and Rental Co Ltd, which is controlled by Geely, to build a network of full service in automobile sales, repair, maintenance, renting and financing.

The joint venture will provide products to the expected network, the statement said.

Geely, owned by Li Shufu, one of the richest men in China, is one of a small number of Chinese carmakers mainly depending on developing its own models.

The vast majority of China's major automakers are assembling foreign models of their joint venture partners --- such as Germany's Volkswagen, US General Motors, French Citroen, and the Japanese firms Toyota and Honda.

Geely has made a five-year plan (2003-07) to sell a total of 1 million cars.

The company also plans to introduce 14 new self-developed models during the period and to develop 1.0, 1.3, 1.5, 1.6 and 1.8-litre engines.

Geely has clinched deals with a host of companies from Germany, Italy and South Korea to co-operate in car, engine and spare parts design and production.

Besides the two joint ventures in Shanghai and Ningbo, Geely has another manufacturing base in Taizhou, Zhejiang Province, which is producing the Haoqing compact car.

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