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Mitsubishi Motors to buy into China partner's subsidiary
(Kyodo News International (Tokyo) (KRT) Via Thomson Dialog NewsEdge) Apr. 12--TOKYO -- Mitsubishi Motors Corp. said Wednesday it will spend 8.75 billion yen to take a 25 percent stake in South East (Fujian) Motor Co., a 50-50 joint venture between China's Fujian Motor Industrial Corp. and Taiwan's China Motor Corp.
The agreement signed in 2004 by Mitsubishi and China Motor, which is 14 percent owned by Mitsubishi, called for the Japanese automaker to assist in the operations of SEM primarily through technological support, but Mitsubishi has now decided to buy into SEM as part of a move to let the Chinese venture build and sell its output under the Mitsubishi brand, a Mitsubishi official said.
SEM, which was founded in 1995 in the southern China province, now sells cars including those based on Mitsubishi's Lancer model under its own marque.
After Mitsubishi's acquisition of an equity stake in SEM, the Chinese venture will be owned 50 percent by Fujian and 25 percent by China Motor.
The move marks Mitsubishi's fourth equity investment in mainland China after those in Shenyang Aerospace Mitsubishi Motors Engine Manufacturing Co., Harbin Dongan Automotive Engine Manufacturing Co. and Hunan Changfeng Motor Co.
Mitsubishi vehicles sold under the Japanese company's label are estimated to have totaled 22,000 vehicles in China in fiscal 2005 and Mitsubishi's fiscal 2006 projection calls for raising the figure to 82,000 units by expanding its dealership network. Those shipped under Chinese firms' brands came to about 107,000 units in fiscal 2005.
In a related development, Mitsubishi has set up a research and development center in Shanghai to help it develop vehicles for the Chinese market.
Lingfa Car Technical Consulting (Shanghai) Ltd. is Mitsubishi's wholly owned R&D center, its third R&D unit based outside Japan.
The center, capitalized at 30 million yen and with a workforce of 30, will initially concentrate on assuring quality in locally-produced parts and components, following trends in vehicle and traffic laws and regulations, the automaker said.
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