Yulon, Local Auto-Parts Suppliers to Set Up Production in Hangzhou
2010/04/26 | By Quincy LiangTaipei, April 24, 2010 (CENS)--Yulon Motor Co., a major carmaker in Taiwan, recently announced its partnership with eight local auto-parts suppliers to set up an auto production zone in Hangzhou, Zhejiang Province of China.
Insiders see such move as indicative of the automaker being allowed to make cars in China, saying that Yulon applied over four years ago to the Chinese central government to build a car plant.
Yulon is emulating the success of its affiliated China Motor Corp. (CMC), which tied up with 30 local parts makers to set up an automobile production zone in Fujian Province of China. CMC is a major shareholder of affiliated South East (Fujian) Motor Co., Ltd. (SEM) in Fujian.
A Yulon executive said that there will be several waves of investments by local parts suppliers in Hangzhou, including electric vehicle (EV) parts makers.
Improving relationships between China and Taiwan is motivating Yulon's application to build a car plant in China, unperturbed by last year's upheaval in the global automotive industry.
Chen Kuo-rong, however, said that the Chinese State Council has not okayed Yulon's application to build passenger cars.
According to Yulon's board-meeting, the eight local auto-parts makers will set up eight overseas subsidiaries and set up a venture firm to found production plants in Hangzhou, with Yulon to invest only US$775,000 for a 1% to 5% stake in the venture firm.
Yulon poured US$49.8 million to set up an auto-parts production subsidiary in Hangzhou in 2007, aiming to build automotive engines with annual capacity of 200,000 units. According to Chinese media reports, the Taiwanese automaker promised the local government to set up also an automobile R&D center as well as automobile production zone in the city.