German-US auto giant DaimlerChrysler Wednesday said it plans to form a joint venture with Fujian Motor Industry Corp on the Chinese mainland and China Motor Corp from Taiwan in mid-2004 to produce its Mercedes-Benz van.

The joint venture has been approved by the National Development and Reform Commission of Chinese mainland, DaimlerChrysler said in a statement.

The three companies will invest 200 million euros (US$245 million) into the joint venture, which will be located in Fuzhou, East China's Fujian Province, DaimlerChrysler said.

The equity structure of the joint venture has not been revealed.

With an annual capacity of 40,000 units, the venture will start to produce the Mercedes-Benz Sprinter, Vito and Viano vans at the end of 2005, the company said.

The effort is seen as a new crucial step of DaimlerChrysler group to expand into China, the world's fastest-growing auto market.

DaimlerChrysler, the Fujian auto firm and China Motor "will build up the joint venture as Mercedes-Benz van manufacturing and distribution base for China and some (other) Asian countries,'' the company said.

In September of this year, DaimlerChrysler clinched a deal to invest 1 billion euros (US$1.23 billion) with Beijing Automotive Industry Holdings Corp to produce the Mercedes-Benz sedans and trucks in China's capital.

The Fujian auto firm and China Motors now operates a 50-50 joint venture in Fuzhou, producing the Delica and Freeca mini vans, and the Lioncel compact sedan which is based on the Lancer of Japan's Mitsubishi Motor.

Mitsubishi Motor, 37.3 per cent owned by DaimlerChrysler, controls a 25 per cent stake of China Motor.

The Mercedes-Benz E and C-class sedans will be produced in 2005 at Beijing Jeep, the joint venture between DaimlerChrysler and Beijing Automotive.

Mercedes-Benz Actros trucks will be made at the plant of Beijing Foton, a subsidiary of Beijing Automotive.

DaimlerChrysler also has a Mercedes-Benz bus joint venture in East China's Jiangsu Province and a technical licensing production project of its Setra coaches in eastern Auhui Province.

South Korea's Hyundai Motor, 10 per cent controlled by DaimlerChrylser, has a joint venture with Beijing Automotive to produce the Sonata sedan.

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