Nissan Motor signed a deal with the mainland's second-biggest car group yesterday to invest US$1.28 billion to produce 900,000 vehicles within 10 years in a market it described as its new frontier. At a lavish ceremony at the Diaoyutai State Guest House, Nissan chief executive Carlos Ghosn signed the 50-50 joint-venture agreement with Miao Wei, chief executive of the state-owned Dongfeng Motor Corporation. The two will set up a new company, Dongfeng Motor Company, which aims to become a globally competitive maker of commercial vehicles and passenger cars, with sales of 550,000 units in 2006 and 900,000 within 10 years. Nissan has promised to invest directly 8.55 billion yuan (about HK$8.12 billion) in the new firm for its equity stake and to spend an additional 20-30 billion Japanese yen (about HK$1.27-1.91 billion) in capital development until 2006, while the Chinese side will contribute its existing land, plant and equipment. This will make it one of the biggest vehicle joint ventures in China. 'The partnership between Nissan and Dongfeng is the first of such a scale involving a Chinese automotive company and a foreign partner,' Mr Ghosn told a news conference before the signing. 'To support the profitable growth of the new company, the agreement calls for Nissan to provide management expertise in product planning, purchasing, plant productivity, logistics, quality control, brand management, marketing and sales, distribution network and financing,' he said. Of the 550,000 target for 2006, 330,000 will be commercial trucks and buses produced in existing Dongfeng plants in Shiyan and Xiangfan, in Hubei province, and the remaining 220,000 will be passenger cars, from economy to luxury, bearing the Nissan label and produced at Dongfeng plants in Xiangfan and in Guangzhou. The 8.55 billion yuan investment was one of the biggest Nissan had ever made overseas, Mr Ghosn said. Reuters reports that pacts by other foreign automakers have been more limited in scope, focusing on specific market segments like passenger cars. Analysts said Nissan appeared to be plotting a much broader attack on China's market, one of the fastest growing in the world. 'This co-operation is much deeper than that of other joint ventures by international car-makers in China. If Dongfeng injects all its auto assets . . . that means Nissan has a foundation across a range of vehicles,' Chen Rong of Sun Hung Kai Research in Shanghai told Reuters. Mr Miao said the partnership with Nissan would be vital for his company's future as a competitive, full-line vehicle manufacturer. The Southern Weekend newspaper said yesterday the negotiations had been difficult, with Nissan demanding management control and the creation of a new company, with capital injection by both sides, and that the two sides had been divided on what models to make, how to evaluate the value of Dongfeng's assets and how much of its existing labour force and company it should take on. Mr Ghosn said serious negotiations had begun in July 2001 and that, from the beginning, his side had been told that it would have to invest in existing plants.