- Kia signed an Agreement on Collaboration of Capital with Dong Feng Automobile Group, one of the top three automobile groups in China
- Dong Feng Automobile Group invests in and secures 20% equity of Yueda-Kia Motors.
Kia Motors held its ceremony for signing the collaboration of capital agreement with Dong Feng Automobile Group, one of the top 3 Chinese automakers, on the 27th. This gave a green light to Yueda-Kia Motors, Kia’s partner in China, to launch its passenger car business full fledgedly.
With its initial Chinese classification as passenger cars in 1996, Kia had been restrained in its production and marketing efforts and had only been making the Pride, its hatchback car. The new collaboration of capital, enabled Kia Motors to break the restraints and engage in production and marketing of its entire range of automobiles. Kia Motors had achieved its long-cherished dream of producing its entire range of motorcars in China 5 years after its entry into the Chinese market. This was a dramatic turning point for creating its success in the Chinese market.
In the agreement signed by Yeong-Heung Seol, Division Manager responsible for Hyundai and Kia Motors and Zhou Wen Jie, Dong Feng Automobile Group, Division Manager responsible for restructuring the Chinese market, both parties agreed on * Dong Fung’s participation in the equity of Yueda-Kia, an already established local joint venture, * production of modern Kia passenger cars in China * Future increased annual production, from 50,000 units to 300,000 units.
They further agreed to the equity distribution of 50% for Kia Motors, 30% for Wieda and 20% for Dong Fung and to Dong Feng-Yueda-Kia as the name of the new corporation. They also agreed in principle that Kia Motors would directly manage the new joint venture company for its long-term development.
As a result of this collaboration of capitals, Dong Feng has taken over 20% of Yueda-Kia and can achieve diversification and enhance its technical expertise by including Kia’s newest models in the new joint venture company..
Joining the WTO this year, China announced its 10th 5-year auto industry development plan aimed at protecting its weak auto industry. It plans to group numerous small size companies into several large companies by 2005 and support only the large automakers. Thus making Yueda-Kia, comply with the Chinese government’s policy for developing its car industry, together with the other large auto companies. Kia, Dong Feng and Yueda agreed that the new incorporated joint venture company shall have independent management, production and marketing, and announced that the new corporation can now capture the Chinese car market, independently of Citeron, currently produced by Dong Feng.
Wang Yong, Chief of State Development Planning Commission and Lu Si, Chief of State Economic and Trade Commission participated in the signing ceremony and emphasized that China and Korea should exert their best efforts for the success and development of the joint venture company. The also expressed their deep concern in Dong Feng’s collaboration of capital with Yueda-Kia.
By obtaining the approval of Chinese government to make passenger cars in China, Kia Motors has laid a solid foundation for joining the top 5 global car makers, successfully capturing the Chinese market which will emerge as the largest car market in the world, expected to hold 50 million cars by 2010.
- Explanation of photos
Kia Motors signed an agreement on collaboration of capital to push forward its passenger car business with Dong Feng Automobile Group, in Beijing at the Kunlun hotel on 27th.
The picture shows Yeong-Heung Seol (Right), Managing Director of Kia’s China Division signing the agreement on collaboration of capital with Zhou Wen Jie, (Center) Division Manager for restructuring of Dong Feng Automobile Group and Hu You Lin (Left), Chairman of Yueda-Kia Motors Co Ltd.