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Auto Industry

Renault inks deal with Dongfeng to win access to China growth market

French carmaker Renault has become the last of the world’s top-ten auto makers to start producing cars in China. After signing a deal with China’s Dongfeng, Renault hopes to tap into the world’s biggest car market.

Nine years after first announcing plans for a joint venture, Renault and Chinese state-owned Dongfeng Motors had signed a joint venture agreement, the French carmaker announced Monday.

Renault Chief Executive Carlos Ghosn described the 50-50 partnership as a strategic alliance, as Dongfeng had paramount knowledge of the Chinese market which boasted the biggest growth potential in the world.

“This project is about exploring new frontiers. The challenge is big but we are ready and well-prepared,” he said.

The joint venture gives Renault full access to the Chinese car market from which it has so far been barred because of the lack of a strong local partner. China's Communist government requires all foreign auto makers to team up with a local partner to be allowed to produce cars in the country.

With Dongfeng, Renault would invest 7.76 billion yuan (928 million euros) in a new car factory in Wuhan, Hubei province, expected to start production in 2016, the French carmaker said.

Dongfeng is China's second largest carmaker, with sales of 3.08 million cars in 2012. It already runs joint ventures with Nissan and struggling French carmaker Peugeot. Noting the partnership would help Dongfeng go global, the firm's president Xu Ping expressed the hope of turning the joint venture into a success.

The project has been almost a decade in the making, after a previous Chinese joint venture by Renault failed. In 1993, the French carmaker launched operations with China Space Sanjiang Group to manufacture the Traffic minibus. In 2003, it stopped the production.

uhe/ph (AFP, Reuters)