Joint Venture Proposal for NewChin Corporation


Ford Corporation

Ford, the oldest automobile manufacturer, has a strong interest to create a better and more challenging relationship with your company in forms of joint ventures.

History means quality and reputation, but Ford has never been satisfied with itself.

In 1994, Ford 2000 is an initiative begins with the consolidation of Ford's North American and European operations, and continues with a commitment to bring the entire Ford global organization into a single operation by the year 2000.

Ford 2000 created a single, global management team. This has allowed the company to eliminate duplication, initiate best practices, use common components and designs for the advantage of scale, and allocate resources to wherever they are needed to best serve market needs. Ford 2000 combines the power, resources, and reach of a world company with the immediacy, the intimacy, the agility, and the spirit of a small one. This was accomplished with the creation of five vehicle centers.

Ford 2000's strength is that it fully utilizes the company's depth of human diversity. Ford believes that diversity will be the engine that drives the creative energy of the corporation of the 21st century. Successful companies will be those who are able to draw on this diversity, to stay on the innovative and competitive edge of their fields.

And we like to have AutoThai join our Ford 2000 to become another successful story in the Ford's and industrial history.

A joint venture with us at the same time means upgrading your manufacturing skill and design skill instantly. We will offer assistant from almost every department of our Ford compnay including, informaton research, marketing and financing. It will be the end to your wondering of how to enter the world market.

We truly believe that Ford will be a long time partner and friend to your company to enter the 21st century. We like you to join with us to explode the world of opportunies.


Our Proposed Car - For Escort

Plant Production Capacity:

Initially, 250,000 car production capability per year and 30% of which produced for export. With Ford's srong global network and quick expansion in the Pacific Asia, export will start immediately after the production starts. And also there is a huge demand of ford auto parts in Asia Pacific region, so there are also a big opportunity for this joint venture to produce parts for the domestic market and export market.

The reason we lower the initial production capacity is because we believe that a new model needs some period of time to get into the market and develop a reputation. So the first year capacity maybe a little lower. But we think the expansion capacity should be higher than 600,000 cars, because the booming chinese economy will increase the auto demand so quickly in the next five years.

Ownership:

We expect this joint venture agreement to be 8 to 10 years long. And during the agreement, Newchin Corporation can not form any other business

Management

We propose a 15 member Board of Directors.

7 Ford
7NewChin
1 Foreign Investment Commission of China

Because there are technology transfer involved and new development will also be invoved in the new joint venture, we believe that 7 directors from our Ford Corporation will be suitable for the operation the first two years. After that, the number of directors can be lowered to 5 for further expansion and operation.

Financing

Contributions toward total capitalization:

1. 40% Equity

-50% to be provided by Ford
-50% to be provided by NewChin
Though Ford and Newchin Corporation put in same amount of equity, Ford only owns 40% of the joint venture. So we think a equal amount should be more fair.
2. 30% to be borrowed in the form of bonds by our joint venture.
3. 30% to be acquired from the chinese stock market. We believe that chinese stock market is mature enough for us to have an IPO. And the stocks can also lower our risk of failure of paying back the bonds.

Locations

1. In the municipality of Tianjin

Tianjin is the third largest city in China. The tremendious amount of human resource, capital and political convenience can really help the new joint venture to start the operation, expansion and marketing.

Newchin Coorporation has facilities in Tianjin, so we can still try to fully use the existing facilities.

Technology Transfer and Training

1. Immediate needs:

-Rapid training of Newchin Corporation technicians and management

Right after the agreement signed, we will start to train a group of Newchin's technicians and managers. We then will build a research center in Tianjin to help develpment and training. A training program will be implemented to help employee retraining. The training will be both in Ford's facility in US headquater or in China.

2. Future needs:

-Rapid and meaningful technology transfer

Certain amount of technology transfer will be alowed.

-After the first four years, 100% of components to be supplied within China

It is hard to make sure that all the parts to be supplied within China, because we are trying to improve our design every year. For the new model we design specifically for China, we would like to try our best to manufacture those parts in the facility owned by the joint venture.

Regards,

Ford Corporation


Copyright 1996, Ford Team Designed and Maintained by Zan Kuang.