Section 4. Expanding Business in China through Joint Ventures
Item 1. Production Sites Expanded
Sichuan Toyota Motor established
TMC proceeded with a commercial vehicle joint production project in the Sichuan area, negotiating with Sichuan Tourer Manufacturing concerning production of the Coaster microbus. The Coaster, which was exported from Japan as a completely built vehicle, was popular in China, and the central and local governments as well as several automakers were eager to produce it locally.
The project planned to use the stamping dies for the previous Coaster model (which was undergoing a redesign in Japan in 1993) and the production line for its engine (the production of which was to be terminated shortly) was to be relocated from Japan. The aim was to keep capital investment in facilities low so products could be supplied at affordable prices. There were concerns, however, that the part of the plan that described production of a "prior model" conflicted with a provision of the Policies for the Automobile Industry that prohibited technology transfer projects if the projects involved products that were no longer produced in their home country.
In order to carry out the project for the Coaster, which was desired by the central government, TMC engaged in determined negotiations with permitting agencies, the Sichuan provincial government, and Sichuan Tourer Manufacturing. As a result, agreement was reached on implementation of the project for a Coaster newly designed specifically for the Chinese market, and Sichuan Toyota Motor Co., Ltd. (now Sichuan FAW Toyota Motor Co., Ltd. (SFTM)) was established in 1998 with a 50 percent stake held by Sichuan Tourer Manufacturing, 45 percent held by TMC, and five percent held by Toyota Tsusho Corporation. Sichuan Toyota Motor conducted a line-off ceremony for the first Coaster in December 2000.