Swedish bus producer Volvo's joint venture with Shanghai Automotive Industry Corp (SAIC) has reached an agreement of intent with a local company to create a new bus joint venture in East China's Shandong Province.

The Volvo-SAIC joint venture, named Sunwin, will control a 51 percent stake in the new joint venture in Qingdao, a booming port city in Shandong, according to a Sunwin statement.

The remaining share will be held by the state-run Qingdao Public Transportation Group.

The new joint venture, to be based at the Qingdao firm's existing bus manufacturing and repairing plant, will have an initial annual production capacity of 1,000 city and commuter-use buses, Sunwin said.

But Sunwin representatives did not reveal total investment in the new joint venture.

The buses will be assembled with domestically made components and under the Sunwin brand, and will mainly supply Qingdao - one of the venues for the 2008 Beijing Olympic Games - and Shandong Province.

Sunwin, in which both Volvo and SAIC will have 50 percent stakes, was established in 2000 with a total investment of US$97 million.

The company now has an annual manufacturing capacity of 2,700 buses. It produced more than 1,000 buses with imported Volvo chassis pieces.

Foreign and local companies are revving up for the fight for control of China's thriving bus market.

Volvo also has a tourism-use bus joint venture in Xi'an, the capital of Northwest China's Shaanxi Province.

DaimlerChrylser has a joint venture in East China's Jiangsu Province, producing Mercedes-Benz high-end buses, while the Republic of Korea's Daewoo has a bus joint venture in South China's Guangxi Zhuang Autonomous Region.

Yutong, a Shanghai-listed company based in Central China's Henan Province, now is the biggest large and medium-sized bus maker in China by producing more than 10,000 units last year.

(China Daily March 10, 2004)