Being at odds with its number one trading partner Japan at the moment, China shows that it doesn’t have to be the big bully, and that it can make nice with other former enemies if it feels like it. China gave a surprising regulatory nod to a joint venture between Tata-owned Jaguar Land Rover and Chery. If you think they were long married, then you are right. They said yes a while ago. However, in China, a joint venture is not really a joint venture unless the National Development and Reform Commission (and sundry other bureaucracies) have given their nod, and did put their chop on the contract.
Reuters says that deal will “help raise the profile of Chery, a mass volume player aspiring to gain access to the lucrative upscale segment dominated by foreign brands.
It also marks Jaguar Land Rover’s latest effort to expand its appeal in the world’s largest auto market, where luxury sedans and SUVs remain in hot demand even as the overall car market cools.”
Reuters’ reporter Fang Yan has seen these deals before and asked Chery whether they had actually seen the NDRC approval, whereupon a Chery spokesman said: “We heard the project has been approved, but we have yet to receive the official notice from NDRC.” Let’s hope the letter will arrive.
The deal is surprising insofar as the Chinese government has been discouraging JVs with foreign carmakers all this year (while not explicitly ruling them out) in an attempt to, well, discourage overcapacity. Even more problematic, Chery is independent and not one of the big state owned enterprises. But you never know.
If the NDRC letter arrives, then the venture will be based in Changshu near Shanghai and will be able to produce 130,000 units a year. The plant will make in-demand Land Rover SUVs initially, followed by Jaguars later.