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Hyundai Motor, South Korea's leading automaker, is adjusting its business strategy in China. The company has announced plans to establish a joint venture with Jianghuai Automobile Co., Ltd., signaling a new phase in its operations within the Chinese market. This move comes after an extended period of rapid growth and intense competition in the domestic automotive sector, which has now transitioned into a more stable phase.
Jianghuai Automobile, one of Anhui’s major automotive players, has been cautious about the news. A spokesperson from JAC stated that while the cooperation with Hyundai is under discussion, no formal agreement has been signed yet. “At this moment, the information is not confirmed,†they said, adding that the chairman is currently in South Korea and will provide updates upon his return.
The partnership between Hyundai and Jianghuai is not entirely new. Their collaboration dates back to 1998 when Jianghuai introduced modern passenger cars through technology transfer. Over the years, the relationship evolved, leading to the successful introduction of the H1 compact commercial vehicle, known as Rui Feng. The model became a hit, generating significant revenue and boosting confidence for further cooperation.
In 2002, the two companies signed an agreement to introduce six models of heavy trucks from Hyundai, previously produced only in South Korea. Jianghuai invested 300 million yuan to set up production lines, aiming to achieve a combined capacity of 15,000 vehicles annually. This project is expected to strengthen JAC’s position in the commercial vehicle segment and help it expand its product range.
For Hyundai, the joint venture represents a strategic move to tap into China’s growing demand for commercial vehicles. With limited growth potential in the Korean market for mid- to high-end heavy trucks, expanding into China is a logical step. According to Hyundai’s overseas expansion plan, by 2010, 25% of its production will be based in China.
However, Hyundai’s efforts in China have faced challenges. Previous attempts, such as the Guangzhou Peugeot project and the Beijing Automotive joint venture, did not materialize. Now, focusing on commercial vehicles through Jianghuai may offer a better opportunity for success.
This joint venture also marks the end of Hyundai’s previous partnership with Huatai Automobile. As per current national policies, the chances of a future joint venture between Hyundai and Huatai are slim. Therefore, Hyundai is placing its bets on Jianghuai, hoping to secure a strong foothold in the Chinese market through this new collaboration.