Section 4. Overseas Business Expands Globally
Item 5. China
A policy of developing the Chinese automobile industry through joint ventures with foreign capital went into effect with the establishment of Beijing Jeep in 1983 and Shanghai Volkswagen and Guangzhou Peugeot in 1984. However, spot exports of completely built units remained important for foreign companies. To enhance after-sales service of the vehicles that it exported to China since the start of Crown exports in 1964, TMC cooperated with Toyota Tsusho and others to launch the Toyota Authorized Service Station (TASS) program in 1980.
Under the TASS program, TMC was able to provide technical guidance and certification to TASS service shops established with local capital. The first TASS opened in Beijing in July 1980, and TASS expanded to Guangzhou in 1982. TMC established TASS training centers in Beijing and Guangzhou in 1985 to raise the technical skills of TASS service shop mechanics. TASS became a network of more than 70 service stations located throughout China by the time TMC began full-scale passenger car production in China in 2002 and later led to the smooth expansion of authorized dealers. Also, an automotive training school was established in Beijing in 1987, and TMC cooperated with this project as well.
With regard to local production, Daihatsu Motor Co., Ltd., a Toyota group company, entered into a manufacturing technology agreement with Tianjin Automobile Co., Ltd. in March 1984. Tianjin Automobile began producing the Hijet in October of that year and the Charade passenger car in 1987.
In November 1988, TMC and Toyota Tsusho entered into a commercial vehicle technical support agreement with Shenyang Jinbei Passenger Vehicle Manufacturing Co,Ltd The agreement provided for TMC to provide technical support concerning the Hiace and for Shenyang Jinbei Passenger Vehicle Manufacturing Co., Ltd., a Shenyang Jinbei Automotive group company, to produce the Hiace under the Shenyang brand. Toyota Auto Body also participated in this project.
Shenyang Jinbei Passenger Vehicle Manufacturing completed its first vehicle in November 1991. Initially, the scope of the technical support was limited to body stamping and welding, but in 1992 the agreement was expanded to include painting and assembly processes. The Shenyang-brand Hiace was popular as a microbus, and Shenyang Jinbei Automotive Corporation, Ltd. grew to become China's largest manufacturer in this category.
The business environment for local production of the Toyota brand was becoming critical. Until the mid-1980s, small-scale regional automobile companies in China were established one after another, and the number was about double that in the late 1970s. In order to foster domestic companies and raise their international competitiveness, in 1986 the Chinese government announced an integrated technology and trade policy that required the disclosure and provision of technology in order to trade with China and sell goods. With the automobile industry breaking into smaller companies and becoming more disparate, the China National Planning Committee in 1989 formulated a "three large, three small" policy based on the Automotive Industry 2000 Development Plan Outline announced in 1987, with the aim of reorganizing and consolidating automobile manufacturers. The plan called for the industry to be consolidated into three full-line manufacturers and three middle-tier manufacturers. In 1992, "two micro" was added to include two manufacturers of compact cars.
Alliances with China's major automobile manufacturers were generally set by the early 1990s, mainly with European and American firms. In 1994, China's State Council announced its Automobile Industry Policy in line with the "three large, three small, two micro" policy. The main aspects of this policy, which aimed to develop the automobile industry into a core industry, were the promotion of domestic production and the development of the automobile parts industry.