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Scania opens a bus plant in China

Scania is starting bus production in China. Scania and the Shandong Bus Corp. Ltd. signed an agreement to open a 50-50 joint-venture company aiming for an annual production of 1,000 buses.

The agreement signals the conclusion of a long period of negotiations. The new company starts operating with an initial investment of 10 million US dollars.

"This agreement represents a breakthrough for Scania's long-term strategy in China," says Leif Östling, President and CEO of Scania. "As I have emphasised on many occasions before, we regard the issue of management control as a vital concern when investing in China. I feel that we have now reached an agreement which is satisfactory to both parties."

The new company will trade under the Shanscan name and it will manufacture buses for domestic Chinese inter-city operations. The new bus plant will be located in Liaocheng, about 120 kilometres west of Jinan in Shandong Province.

"Scania has maintained a presence in China since 1965 and there are more than 2,000 Scanias on Chinese roads today. Exports to the expanding South-East Asian economy currently account for about 10 per cent of Scania's total European production capacity. We already lead the market in Taiwan, for example, and are the largest imported make on several other key markets."

Scania's bus operations have grown particularly rapidly in the Far East during the past year. This applies especially to Taiwan, Malaysia and Singapore. Scania recently signed its largest-ever bus order for Taiwan, in which the Formosa Fairway Corporation, FFC, purchased 50 new buses for inter-city operations. And in just a few weeks' time, Scania will deliver 15 new city buses to TIBS, Singapore's Trans Island Bus Services.

Åke Norrman, Vice President in charge of Overseas Sales and Marketing, says in a related comment:

"The new agreement gives Scania an added presence in China while at the same time further enhancing our image throughout the region."