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China 'No!' to Subaru seduction

BEIJING, China - The Chinese government has rejected a plan by Japan's Fuji Heavy Industries - which owns Subaru - to form a joint venture with Chery in the world's biggest auto market.

China allows a foreign automaker to form only two joint ventures with local partners, though such deals are vital to foreign car companies which wish to trade in the lucrative Chinese market as there are huge barriers to access for those who wish to run their business model on a pure import and distribution system instead of investing in local production.

150 000 CARS A YEAR

Fuji Heavy, considered part of Toyota since the car company has a 16.5% stake in it and has already started two joint ventures in China, any independent deal by Subaru with Chery was scuttled by regulations.

Fuji Heavy applied for the joint venture in May, 2011 and had planned to produce 150 000 vehicles a year by 2015 in China.

China has become an increasingly important auto market since it overtook the US two years ago to become the world's largest.
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