Great Wall Motor Co will give up a joint venture in Russia as it failed to negotiate favorable tax benefits from the Russian government, the firm said yesterday in a statement to the Hong Kong stock exchange.
The joint venture, Great Wall Alabuga Motor Open Joint Stock Company, was set up in March 2007 by Great Wall and Land and Property Management Authority of the Republic of Tatarstan in the Russian Federation. Great Wall owns 75 percent of the joint venture and the Tatarstan agency owns the remainder.
The joint venture, engaged in the production and trading of automobiles, automotive parts and components, was to have commenced production in 2007.
Both parties have resolved to dissolve the joint venture after taking into consideration the prevailing economic slowdown and the failure to win tariff concessions from government.
Great Wall has been applying for tariff concessions and tax benefits from the Russian commerce minister but didn't get a reply. Both parties have injected US$100,000 as initial capital in the venture and have not pumped in more.
Great Wall, the first Chinese privately owned auto maker to list in Hong Kong, said it will continue to work with other Russian partners to sell its products in the Russian and European markets.
Great Wall and other major Chinese car makers including Chery Automobile Co and Geely Automotive Holdings all posted falls in sales and profit this year.
(Shanghai Daily November 19, 2008)
