Chinese might build Mercedes in Beijing
(New York Times)
Updated: 2004-05-09 15:49

Automaker DaimlerChrysler said Monday it has received an important approval from the Chinese government for plans to build Mercedes C- and E-class cars at a new factory in Beijing with Chinese partner BAIC Ltd.

A Mercedes-Benz goes on show in Japan. [Agencies/file]

The green light for the project from the Chinese National Development and Reform Commission is a ``fundamental step'' in the approvals process for the Beijing plant, the company said in a statement.

The decision was announced as Chinese Premier Wen Jiabao visited Berlin on Monday and met with DaimlerChrysler CEO Schrempp, who visited China last week to discuss the project.

``Establishing a manufacturing presence for Mercedes-Benz passenger cars in China is a key part of our Asian strategy, and further complements our activities in the Chinese market,'' Schrempp said in the statement.

``In the future, our intensified involvement in China will help ensure that we take even better advantage of the many business opportunities in the world's fastest-growing auto market,'' he said.

DaimlerChrysler faces a shake-up of its Asian strategy after it distanced itself from Japanese partner Mitsubishi Motors last month by refusing to inject new capital into the debt-laden company.

Its other major Asian partner, Hyundai, has said it is seeking a narrower relationship with DaimlerChrysler in ongoing talks. DaimlerChrysler's plans with BAIC have helped sour relations with Hyundai, which says that the alliance violates its own exclusive deal with BAIC.

The Beijing plant would have an initial production capacity of 25,000 vehicles, which would be built from kits shipped by Mercedes-Benz, the company said.

The plant is part of a 1 billion euro (US$1.2 billion) framework cooperation agreement signed last fall with BAIC, which also includes the relocation of the company's Beijing Jeep plant and expanding joint truck production for the Chinese market.

DaimlerChrysler spokesman Trevor Creed said the company would work out details with BAIC before signing a final joint venture agreement. ``The joint venture agreement is the next step, which we expect by the end of the year,'' Creed said.

The statement didn't say when production would begin but said Monday's signing meant the start of production was ``now within reach.''

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