Wuhan, Detroit of the East, gives green light to Renault
BEIJING/SHANGHAI (Reuters) - Renault SA clinched full access to China's auto market on Monday by sealing a joint venture agreement with state-owned Dongfeng Motor Group in Wuhan, a city fast shaping up as China's own Detroit.
Nine years after the two companies first announced plans for the joint venture, they finally inked a US$1.3 billion (S$1.6 billion) 50-50 partnership to introduce the French carmaker's own locally assembled models in the world's biggest auto market.
The deal allows Renault to fully tap demand in China, something it has been unable to do until now because of the lack of a strong local partner. China's central government requires all foreign automakers to have a local partner to be allowed to produce cars in the country.
To build a Chinese presence, Renault has been forced to rely on imports from South Korea. Now with Dongfeng, it will invest 7.76 billion yuan (S$1.6 billion) to build a factory in the central city of Wuhan, with the first car due to roll off the production line in 2016.