13-07-2007: Proton makes headway into China

PETALING JAYA: Proton Holdings Bhd has made headway into the China market which will see the loss-making car maker supplying 30,000 completely built-up (CBU) cars.

Proton said on July 13 that its unit Perusahaan Otomobil Nasional Sdn Bhd would supply the cars to Jinhua Youngman Automobile Manufacturing Co Ltd, China's leading commercial vehicle manufacturer.

Under the agreement, Youngman would import 30,000 Gen.2 CBU units and resell under its own brand "Europestar" and eventually, develop a new range of made-in-China “Europestar” cars with the engineering services through Lotus.

In addition to this, the arrangement would also encompass the technology licensing of the Gen.2 platform, Campro engine for Youngman’s new “Europestar" cars and supply of genuine spare parts.

The agreements were signed in Zhejiang, China, by Proton managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir, while Youngman was represented by its chairman, Pang Qingnian.

Proton also said its 55% owned Proton Parts Centre Sdn Bhd would supply genuine service parts to Youngman.

"Youngman will also have access to engineering and development consultancy services from Proton via its subsidiaries in the LOTUS Group of Companies, for the development of complete-knocked down (CKD) cars for Youngman in China," it said.

Proton said the relationship of Proton and Youngman was one of independent contracting parties, adding that it should not be construed as creating an agency or partnership between the parties.

It also said that Youngman had been awarded a licence from the Chinese authorities to produce passenger vehicles. It added that the luxury coach and truck maker has a wealth of experience in the Chinese market.

"With the signing of this Agreement, Proton will gain market access into China, and launch Proton's ascent to the next level of growth in export and international sales optimisation," it said.

Syed Zainal said that these were landmark win-win agreements, as it would enable Proton to sell its products and commercialise its technologies in China through Youngman for their brand of passenger cars in a huge market with promise of exponential growth.

Car ownership in China is only 1% of the population. With the middle-income group growing in size spurred by economic growth expected to be above eight per cent annually, the car market is estimated to be revved up by 20% to 30% annually in the next few years, it said.