Hyundai/Kia Motors to Advance into the Chinese Mainland
- Establishment of local production plants with an estimated annual production capacity of 300,000 vehicles
- Growth plan into the largest automaker in China with the latest models
- Strategic outpost for becoming one of the five largest automakers in the 21st century
On January 26th, Hyundai Motors and Kia Motors (Chairman: Mong-Koo Chung) agreed with Jiangsu Yueda Group, a local partner, to establish a production plant with an annual capacity of 300,000 vehicles, and held an inauguration ceremony. At the inauguration ceremony, Jiangsu Yueda Group(‘Yueda’ henceforth) agreed to produce most advanced Hyundai/Kia auto models from the existing joint company Yanchen Yueda-KIA Motor Co., Ltd.(‘Yanchen’ henceforth), and at the same time, make an investment of 300 million US dollars to expand the current production capacity from 50,000 to 150,000 vehicles by the year 2002. By expanding the production capacity step by step, the company ultimately hopes to produce 300,000 vehicles every year, up to the same level as the largest automaker in China, Shanghai Motors. Along with this, Hyundai Motors will take over 20% of Yanchen shares and adjust the share ratio of Hyundai/Kia versus Yueda into 50 to 50. Furthermore, to the extent that the Chinese law permits, both parties agreed to adjust the ratio to 51% for Hyundai/Kia against 49% by Yueda, which will enable Hyundai/Kia to secure management rights over the joint venture company. In addition, the three companies agreed to change the company title from ‘Yanchen Yueda-Kia Motor Co., Ltd.’ to ‘Jiangsu Hyundai Kia/Yueda Motor Co., Ltd.’ Both parties also agreed to observe the relevant laws, regulations, and domestic production ratio enforced by the Chinese government, as well as to contribute to the long-term development of the Chinese automobile industry through transparent management. The ceremony, which began at five o’clock p.m.(local time) and continued into a dinner ceremony at six o’clock, was attended by a total of 300 distinguished guests including various prominent government officials such as the former Vice Chairman, Mr. Shuetzu Hong and the governor of the Jiangsu Province, Mr. Chungsu Li, attended as well as Mr. Mong-Koo Chung, Korean Ambassador Byung-Hyun Kwon, President Yurin Hu of Yueda Group, President Kye-Ahn Lee of Hyundai Motors, and President Soo-Joong Kim of Kia Motors. In addition, reporters from Central TV, Peoples’ News, China Auto News, and Xinhua News Agency were competing to report the event, reflecting the heated interest by the Chinese people. In his opening remark, Chairman Chung said that both countries shared many similarities in culture and geography and that these common features will complement each other in their industrial development. Mr. Chung also expressed his wish that this mutual cooperation in the automobile industry will become a milestone for strengthening cooperative relationship between the two countries. In response, Governor Li said that he welcomed the investment by Hyundai/Kia, which will contribute a great deal to the Province as well as to the Chinese automobile industry as a whole. With the largest foreign investment ever made by a Korean automaker and an annual production capacity of 300,000 vehicles, Hyundai/Kia Motors expects to make the Mainland China, which is expected to own 50 million automobiles by the year 2010 making it the largest market in the world, as its strategic outpost in leaping forward to become one of the Big Five automakers in the world.