The SOK Group, Russia's third largest automobile maker, said on Tuesday it will set up a joint venture auto factory with an annual production capacity of 100,000 cars in China next year.

Zhong Xiaoyan, general manager of Shenzhen SOK Import and Export Trading Co Ltd, said Russian SOK plans to invest at least US$200 million in the new plant.

The firm sent delegates to dozens of Chinese cities and has chosen Shenzhen, Zhengzhou, Beijing, Shanghai and Ningbo as candidate locations for the joint venture.

Zhong said the delegates also met with over 200 potential Chinese partners during their visits and have selected 10 of them.

All of the chosen Chinese firms have keen desire to collaborate with SOK, he said.

But he declined to name these chosen Chinese partners, saying that SOK is still open to further selections and comparisons.

He said the new joint venture can be put into production within nine months after getting approval from the Chinese Government.

SOK said it hasn't yet applied for Chinese Government approval for investment in the project, but analysts expect the application will get immediate approval from the Chinese Government after being filed because the Chinese and Russian governments are working hard to enhance bilateral trade ties and encourage mutual investments.

Vitaly Ilyin, vice-president of SOK, said the new plant will mainly assemble cars and that 60 percent of the auto parts will be imported from Russia, with the rest being locally purchased.

Forty per cent of the production will be sold in Russia, where supply falls short of demand, and the rest will be sold in the Chinese market, he said.

He said China is an important strategic partner with rosy economic prospects and huge market potential.

The firm said it will take part in the international auto show to be held in Beijing in June.

The show will be a good opportunity for SOK to assess Chinese consumers response to Russian cars, said Ilyin.

He said there are about 20,000 old-model Russian cars in use in China, which were brought into the country in the 1980s.

(China Daily May 22, 2002)