Subsidiaries of FAW, Dongfeng announce cooperative letter of intent

Shanghai (Gasgoo)- Fawer Automotive Parts Company under FAW Group announced that it had signed a letter of intent with Dongfeng Auto Parts Company to establish a joint venture.

The two sides made deal that FAW and Dongfeng will provide their own trademarks to the joint venture company with payments. Dongfeng Auto Parts Company will strive to seize supplying opportunities from Dongfeng Group for the joint-venture company. Dongfeng Auto Parts Company and Fawer Automotive Parts Company will not compete with the joint-venture companies in businesses.

The joint-venture company plans to have five board members with three members from Fawer and others from Dongfeng Auto Parts Company, in which Fawer takes the leading position in operation. Till now, no official agreement has been signed.

In fact, FAW Group has a long-term cooperation and in-depth communication with Dongfeng Motor. Analysts believe the intended cooperation between Fawer and Dongfeng Auto Parts is not only in-depth cooperation between FAW Group and Dongfeng Auto, but also part of trial national reform in state-owned auto enterprises.

Li Keqiang, our country’s Premier of the State Council held executive meeting just on the day when both companies announced the letter of intent. The meeting pointed out that deepening state-owned enterprises’ reforming and promoting the operation efficiency would enhance innovation and competitive power. Supported by the national strategy, reforms on state-owned enterprises are continuously going on.

FAW Group, Dongfeng Auto and Chongqing Changan Auto signed a strategic cooperative agreement on December 1st in Wuhan, planning to conduct cooperation on technological innovation, auto whole-value chain operation, overseas operation and new business modes.

Current FAW Group board chairman Xu Liuping was also said to be invited to meet leaders of the State-owned Assets Supervision and Administration Commission of the State Council to discuss on the cooperation among FAW, Dongfeng and Changan, generating the rumor of merging among them.