Section 4. Expanding Business in China through Joint Ventures
Item 1. Production Sites Expanded
Four parts manufacturing joint ventures established
The Policies for the Automobile Industry announced by the Chinese government in 1994 followed the 1992 "three large, three small, two micro" policy and called for the development of the automobile industry as a core industry including parts manufacturing. At the same time, strict regulations concerning the introduction of foreign capital were adopted, prohibiting a foreign company from establishing more than two automobile-manufacturing joint ventures with different Chinese partners. This was referred to as the "two card" system.
The only Chinese company with which TMC could form an alliance at that time was Tianjin Automobile Industry Group Co., Ltd., with which Daihatsu Motor, a group company, already had a technical partnership. In response to a policy to strengthen the automotive parts industry announced by the Chinese government, TMC established the Toyota China Domestic Production Technical Support Center (now Toyota Motor Technical Center (China) Co., Ltd.) in 1995. Between 1995 and 1997, TMC established four joint ventures to manufacture major components and parts.
The four companies were as follows: Tianjin Fengjin Auto Parts Co. Ltd. (TFAP, established in 1995), a manufacturer of axles and differentials; Tianjin Toyota Engine Co., Ltd. (now Tianjin FAW Toyota Engine Co., Ltd. (TFTE) established in 1996), an engine manufacturer; Tianjin Toyota Forging Co. Ltd. (TTFC, established in 1997), a manufacturer of forged parts; and Tianjin Jinfeng Auto Parts Co. Ltd. (TJAC, established in 1997), a manufacturer of propeller shafts and other parts. TMC's efforts to develop the automotive parts industry in the Tianjin region led to a later passenger car joint project with Tianjin Automobile Industry Group.