Section 4. Overseas Business Expands Globally
Item 1. Taiwan
In the 1980s, TMC actively expanded its overseas business operations in various regions other than North America. The integration of organizations and acceleration of decision-making resulting from the merger of Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd. in 1982 also pushed overseas development.
In Taiwan, a proposed Automobile Industry Promotion and Development Law was announced and a policy of developing the automobile industry through alliances with foreign manufacturers was adopted in August 1979. The policy called for the construction of a compact passenger car plant with annual production capacity of at least 200,000 vehicles, a domestic production rate of at least 70 percent, and a considerable volume of exports. At that time, Taiwan banned the import of passenger cars because of a deteriorating balance of trade, and Toyota only exported trucks from Japan.
Based on this industrial development policy, in March 1980, TMC submitted an application to the Taiwanese authorities for establishing a new business based on foreign investment. Under a plan to start with annual production of 20,000 vehicles (with a 1 percent export rate) in the first year and increase production to 200,000 vehicles (with a 25 percent export rate) by within the fifth year, TMC planned to introduce casting, machining, and stamping processes right from the start of production in order to achieve a 70 percent domestic production rate. The joint venture partner was to be China Steel Corporation, a company in which the Taiwanese government held an ownership interest. Among Japanese manufacturers, Nissan Motor also announced its interest, but TMC was selected as the partner in December 1982.
TMC made every effort for the success of the project, and established an office in Taipei in May 1983. Subsequently, however, there were numerous points specified by the Taiwanese authorities such as the domestic production rate and the export rate that were not in agreement with the master joint venture agreement, and it was necessary to engage in repeated discussions with the Taiwanese government. The negotiations did not make any progress and were broken off upon the expiration of the negotiating period in September 1984.
The following year, however, the Taiwanese government adopted a new automobile industry development administrative proposal with relaxed export obligations. TMC revised its plan to make it one for joint production with Kuozui Motors, Ltd., which was assembling large trucks under consignment from Hino Motors, Ltd. (Hino), and submitted an investment application in December 1985. TMC's plan was for production of commercial vehicles and passenger cars to start in 1988 with a 22 percent investment ratio from TMC. The plan was approved in February 1986. Kuozui Motors began producing the Zace, a one-ton class multi-purpose commercial vehicle, in January 1988 and the Corona in 1989. In addition, the Kuozui Co-operation Club, a local version of the Kyohokai (Toyota Suppliers Association), was established in 1989. Furthermore, before the formation of the joint manufacturing venture, Kuozui Motors had started consignment production of the Dyna in January 1986.
In order to contribute to the development of the local parts industry, TMC established a joint venture with Fengyung Corporation, a stamped parts maker, in June 1986, and began construction of a new plant.