Peeved at Shareholding Limits in China, Audi Leans Toward Cooperation with SAIC-Volkswagen
Yicai Global
/SOURCE : Yicai
Peeved at Shareholding Limits in China, Audi Leans Toward Cooperation with SAIC-Volkswagen

(Yicai Global) Nov. 9 -- Although FAW-Audi reaps massive profits in the Chinese market each year, its modest shareholding in its current venture is steering Audi toward cooperation with SAIC-Volkswagen in China, driven by its less-than-satisfying current interests. Concluding its joint venture with Jilin province-based First Automobile Works in 1988, Audi still owns only a derisory 10 percent of equity in their JV company -- a regulatory holdover from that time. Volkswagen struck its JV with Shanghai Automotive Industry Corp. in 1985. Both FAW and SAIC are state-owned enterprises (SOEs).

Audi is said to have put out its booster cables to SAIC-Volkswagen in the hopes of jump-starting another joint-venture company, and details of their cooperation may be officially forthcoming in the middle of November. Neither FAW-Audi nor SAIC-Volkswagen responded when Yicai Global sought their confirmation of the deal.

Insiders say that, among the tangled joint-venture relationship between FAW, Volkswagen and Audi, the respective shareholdings of the three parties are 60, 30 and 10 percent. Thus, in profit distributions, Audi only gets 10 percent. Furthermore, Audi's plan to increase its shareholdings to 19 percent failed to be approved in time. Hence, Audi is revving up to find another partner.

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