TOKYO - At DongFeng Motor Corp.'s headquarters in Shiyan in central China, Communist-era featherbedding and corporate paternalism linger on. The company runs its own hospitals, schools, dormitories and TV station, among other ventures.
Nissan Motor Co., which is buying half of the Chinese company for $1 billion, didn't want any of it.
That's why, when Dongfeng Motor Co. is born on July 1 as a 50-50 venture between Nissan and the Chinese company, the headquarters will move four hours away to the regional center of Wuhan.
Deciding what parts of the old company to take and what to jettison was one of the issues that delayed the signing of the final pact. But the headquarters move may prove one of the easiest decisions that Nissan faces as it restructures China's second-largest commercial-vehicle maker, and third-largest passenger-car maker, into a leaner, more market-responsive concern.
Nissan aims to increase Dongfeng's carmaking capacity fivefold within one year, to about 300,000 units, while raising first-year sales to 100,000 Nissan-branded cars. At the same time, it wants to raise quality enough to be able to consider truck exports in one or two years.
"The barriers are high, but the desire is there," says Katsumi Nakamura, a Nissan senior vice president who led the negotiations. He is president-designate of the new venture, replacing current President Miao Wei, who becomes chairman.