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Report: Nissan finally set to ink China deal

Ghosn says China is Nissan's No. 1 market priority but has seen his efforts to finalize a deal with Dongfeng stall  

TOKYO, Japan -- Nissan Motor Co. plans to invest around 100 billion yen ($832 million) in a joint venture with China-based Dongfeng Group, according to a report.

The deal will be finalized this fall, according to the Asahi Shimbun, with the investment to come over three years.

Production will start on regular and compact passenger cars next year. The deal between Japan's third-biggest carmaker and China's second-biggest is the latest in a long line of cooperative auto deals between the two countries.

Nissan has been in protracted talks with Dongfeng on the joint venture. The two companies already have a joint venture on light trucks, with Nissan holding a 30 percent stake.

The Japanese company thought it was close to a deal on passenger cars in April and again in June, but the talks broke down.

Management control at issue

Nissan ran into a hitch when Dongfeng refused to give it management control of the joint venture. Nissan has also been concerned about the level of Dongfeng's debt, estimated at $3.8 billion.

The Asashi Shimbun reported at the end of August that Nissan President Carlos Ghosn had stepped up his visits to China to seal the deal.

Ghosn says the China market is Nissan's "No. 1 geographic priority."

According to the Asahi, Nissan and Dongfeng will now invest 43 billion yen to set up the joint venture, then build on the stake when they expand production.

But Nissan says the talks are still not complete.

"Nothing has been finalized regarding the amount of the investment or when production will begin," a spokeswoman told Reuters news agency.

Falling behind

Nissan runs the risk of falling behind in China, where most of its largest rivals have already sealed deals.

Toyota Motor Corp. sealed a deal on Aug. 31 to launch a broad cooperative effort in China with China First Automotive Works, or the FAW Group. That's the country's largest carmaker.

Honda Motor Co. already has a joint venture plant in operation, with Guangzhou Automobile Group, that is set to produce 59,000 cars this year. (Honda expanding production)

German carmaker Volkswagen AG is currently the largest overseas producer of cars in China, in a tieup with FAW Group, and got 7.3 percent of its total sales for 2001 in China.

The prospect of a deal is boosting stock Nissan up 0.45 percent to 898 yen on Thursday morning, at a time the broad Topix is down 0.29 percent.




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