The move will help FAW become the world's largest truck manufacturing base, said FAW general manager Zhu Yanfeng.

"We still lag far behind foreign counterparts in new product development, management, marketing and financing, although FAW is the world's third biggest truck producer,'' Zhu said.

Zhu declined to give details of the Mercedes-Benz talks. The German company already has a truck plant in North China's Inner Mongolia Autonomous Region.

Zhu discussed the prospects at a ceremony marking the production of FAW's 3 millionth Jiefang truck yesterday in Changchun, capital of Northeast China's Jilin Province. FAW began producing the Jiefang trucks in 1956.

"Medium and heavy trucks will continue to be our most competitive products and the core of the company's business,'' he said.

Currently, FAW controls half of the domestic truck market. Last year, the company produced about 220,000 Jiefang trucks, ranking the third after Mercedes-Benz and Sweden's Volvo Truck Corp.

The company said it sold 83,915 medium- and heavy-weight Jiefang trucks during the first half of this year, an increase of 22 per cent from that of the same period in 2000.

Zhu said FAW aimed to maintain its position in the truck market during the country's 10th Five-Year Plan period (2001-05), when some truck models are expected to increase their market share to 60 per cent. Competition from domestic and foreign rivals after China's upcoming accession to the World Trade Organization aren't expected to alter that prospect.

Analysts say truck sales in China are expected to increase to 1.5 million units by 2005 as the country's expressways extending and the logistics sector growing.

Japan's Isuzu has begun producing its F-series heavy trucks at Chongqing's Qingling Motor Co Ltd. Qingling has set a sales target of 3,000 to 5,000 trucks for next year.

Volvo Truck Corp is negotiating with the Shandong-based China National Heavy Truck Corp, one of the FAW's major competitors on the domestic truck market, to establish a joint venture. A Volvo source said the joint venture was expected to become Volvo's largest heavy truck manufacturing base.

FAW has been exploring overseas markets for trucks. The company has established truck assembling plants in Tazania, South Africa and Uganda.

FAW, the pioneer of China's auto industry, also has a car joint venture in co-operation with Germany's carmaker Volkswagen to produce the Audi A6 and the Jetta.

(China Daily 07/16/2001)