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SCMP Reporter

SINGAPORE-based Delco Electronics Asia-Pacific (DEAP), a unit of General Motors, is to sign a US$30 million deal next month with two mainland partners to produce electronic engine-control systems for China.

    ''There is potential to go up to $120 million by the end of the decade if the manufacturing plant meets certain criteria,'' DEAP president Thomas Sheehan said.

  Mr Sheehan said the deal would be signed on February 5 in the Chinese capital, with both Beijing Wan Yuan Industry Corp, a China Aerospace Corp subsidiary, and Beijing Economic Technology Investment Corp, a city Government-controlled enterprise.

  General Motors (GM), through DEAP, will hold a 51 per cent stake in the venture, to be known as Wan Yuan-GM Automotive Electronic Control.

   Wan Yuan will take a 39 per cent stake, with the rest going to Beijing Economic Technology.

  GM participants in the venture are AC Rochestor and Delco Remy, divisions of ACG Worldwide.

   AC Rochester will manage the overall programme for the joint venture.

  Mr Sheehan said the plant was scheduled to become operational by about the end of next year.

   Output would be sold to the Chinese market, with a plan to export later.

  As DEAP's first manufacturing deal in China, the joint venture is expected to turn out at least $3 million in sales in the first year.

  Mr Sheehan said the Chinese market today absorbed about a million units of electronic engine-controls a year, with a potential of between four million and seven million units by the year 2000.

  Electronic engine-controls are a key component of an engine management system, which optimises emission control, fuel economy and driving performance in a vehicle.

  DEAP will supply manifold absolute pressure sensors for the engine management systems, which are essential to regulating the air-fuel ratio, while a US sister company will also ship some components to the China plant.

   ''Because this is a localisation effort, the plan is to shift production to China as manufacturing capabilities increase there,'' said Mr Sheehan, adding that this would not lead to job retrenchments in Singapore and the US.

   Technical personnel from these two countries would be despatched to help set up the Chinese plant.

   DEAP has already set up an office in Beijing to help service the joint venture deal and continue to develop business on the mainland.

   Its key Chinese partner, Wan Yuan, is a major electronic vehicle-component player in China, being responsible for developing, manufacturing and testing of launch vehicles for space satellites.

   One of its long-term partners in the satellite business is Hughes Aircraft Co, a subsidiary of GM Hughes Electronics Corp.

   Meanwhile, Xinhua (New China News Agency) reported a new Sino-Japanese joint venture to manufacture vehicle acoustic equipment has been set up in Dandong city, in China's northeast province of Liaoning.

  The corporation was established by the Dandong Dongbao General Electrical Appliance Corp, and the Alpine Corporation of Japan, a major Japanese producer of sound equipment for vehicles.

  The new company was set up with a total investment of 160 million yuan (about HK$140.8 million), with the Japanese side bearing 60 per cent of the total investment.

  The joint venture will have a co-operative term of 10 years.

   The sound equipment will strictly adhere to advanced international standards and be mainly used in luxury cars.

  The new corporation will become operational in March this year, according to local officials.

  It is expected to reach a production capacity of one million sets of various types of sound equipment by 1996, and realise a sales value of 800 million yuan and profits of 20 million yuan.

    By then it will be China's biggest producer of sound equipment for vehicles.



GM in US$30m car-parts deal