'Very huge and very unconventional'

A controversial Chinese auto executive living in exile in Los Angeles is promoting a U.S. factory project that he promises will dwarf its rivals.

Yang Rong is leading a venture to build a $6.5 billion auto plant in northern Mississippi, where he would hire 25,000 workers to eventually produce 1 million cars a year.

The price tag is six times as much as Toyota Motor Corp. had planned to spend on a new plant that was to produce its Prius nearby in Tupelo, Miss., before it postponed those plans because of the weak economy.

Yang is the ousted former CEO of Brilliance China Automotive Holdings Ltd., BMW AG's partner in China.

It would be easy to dismiss his proposal out of hand. The plan has no brand, products or retail network. But Yang oversaw a rise from nowhere in Brilliance's fortunes in the 1990s, and he has been attracting money from some of China's wealthy residents.

Yang proposes to finance the project with private money raised in China. He is soliciting investors on the promise of both launching a new car venture and obtaining something attractive to many rich Chinese: an American visa.

Vincent Wang, Yang's associate and one of three key project players with the name Wang, spoke with Automotive News on behalf of Yang because of the industrialist's limited English. Wang said the project will attract auto investors through a special U.S. visa program called EB-5. That program, created in 1990, encourages wealthy foreigners to invest in the United States.

A commercial investment of $1 million, or $500,000 if made in an economically distressed area such as northern Mississippi, qualifies a foreign family for a permanent-resident green card. "A lot of people in China want to move some of their money out of China," Wang said.

He is not making details of the financing plan public but says at least 2,000 individuals are standing by to invest.

"What we are proposing is indeed very huge and very unconventional," Wang acknowledged. "But we view this as the best opportunity to get into the U.S. industry."

Yang could be the poster boy for inviting wealthy Chinese to protect their money by moving it out of China. Whether that's a good thing depends on whom you ask. His personal story is steeped in intrigue.

In the early 1990s, Yang was one of the first entrepreneurs to strike it rich in China's auto industry. He was hailed in China as part of a new generation of savvy businessmen and credited with catapulting Brilliance from making dreary buses into BMW's partner in making BMW 3- and 5-series cars.

In 2001, Forbes magazine said Yang was the third-richest entrepreneur in China. He listed Brilliance's stock on the New York Stock Exchange, a first for a Chinese enterprise.

But in 2002, after feuding with a Chinese provincial governor over the location of a new factory, Yang found himself charged with unspecified economic crimes. He fled the country under a false passport for Los Angeles, where he joined his wife and four children. Most of his own personal wealth had to be abandoned in China.

Since 2003, Yang has tried legal maneuvers to recoup his fortunes, including attempting to gain control of Brilliance assets that had been held in Bermuda. Yang unsuccessfully sued the Chinese province of Liaoning, a major shareholder of Brilliance.

The governor of the province responded via China's state-controlled media by alleging that Yang never had been a real entrepreneur but, rather, a government agent. The governor alleged that Yang had been playing the role of a private businessman in an effort to mislead people overseas when in fact he was representing the Chinese government.

Vincent Wang called the assertions a "smear campaign" to discredit Yang.

According to details contained in a Yang lawsuit filed in U.S. District Court in Washington in 2005, Yang's claim for Brilliance's assets went to the Supreme Court of Bermuda, where Yang had incorporated the automaker. The Bermuda court dismissed the claims, concluding that Yang's private holding company, Broadsino Finance Co., never owned any shares in Brilliance.

In 2007, the Chinese government delisted Brilliance from the New York exchange. At the same time, Brilliance said in China that it planned to sell cars in the United States, starting with a 1.8-liter model called the Zhonghua Zunchi. That plan has not materialized.

Vincent Wang said Yang's experience at the hands of China's government is a testament to other wealthy Chinese who fear for their fortunes. "Who better to pitch this investment plan than ... a man who has seen what can happen?" Wang asked.

Vincent Wang said the venture is not just about buying green cards but about creating a moneymaking venture. Project documents say it has new vehicle designs created by the Italian styling house Italdesign Giugiaro. A Giugiaro spokesman said, "We have been contacted, and we are very interested in participating in the project, but nothing is finalized yet."

Those documents also claim that an unspecified unit of Germany's Porsche AG "provides our car's engineering design, including chassis, body, interior, exterior, electronics and integration."

A spokesman for Porsche in Stuttgart said the company as a policy does not discuss engineering projects that it does for clients and declined to confirm the claim.

Another Wang — Chuantao, or C.T., Wang, a former die engineer at General Motors who became CEO of Yang's project last December — said the cars produced will be "multifuel vehicles," powered by a combination of gasoline, electric, hybrid and compressed-natural-gas powertrains. He said the drive systems are being developed by a third party that he declined to identify. He said the project eventually will set up a U.S. dealer network.

Beyond that, the venture's plans are sketchy. It has no expertise in U.S. automotive manufacturing or sales. It has no relationships with North American suppliers, no U.S. marketing resources and no brand.

But it does have an unexpected rival. This summer, Yang's project split in two after a falling out between him and the man he had appointed to manage it: his former attorney and Chinese entrepreneur Xiaolin Wang.

Yang — listed in court documents as Benjamin Yeung, the name he uses in the United States — sued Xiaolin Wang and three other project managers. Yang alleges that the other managers had been steering control of the venture away from Yang and had begun operating under a different but similar name.

Yang's venture is called Hybrid Kinetic Automotive Holdings Ltd. Xiaolin Wang and the others had been operating as Hybrid Kinetic Automotive Corp.

"They were stealing the company from Mr. Yeung," spokesman Vincent Wang said.

In July, an out-of-court settlement required Xiaolin Wang to change the name of his operating entity. It now is known as GreenTree Automotive, said Bill Brabec, a Jackson, Miss., attorney for Xiaolin Wang.

Both projects say they are moving forward independently and soliciting investors through the EB-5 visa program. The original factory site is about 20 miles south of Memphis in economically distressed Tunica County, Miss.Yang's group now says it may go elsewhere.

Before the split, the Chinese project had earned the tentative support of Mississippi state officials. Melissa Medley, spokeswoman for the Mississippi Development Authority, which typically works with new industrial ventures there, would neither confirm nor deny the existence of the project.

But court documents from the Yang-Wang lawsuit contain a Sept. 30 letter to Xiaolin Wang from the authority's executive director, Gray Swoope. In it, Swoope pledges that the economic development group will seek state incentives for the project, including road construction, worker training funds and tax abatements.

Brabec said a formal announcement for Xiaolin Wang's project could come any day now. Vincent Wang said Yang's group hopes to announce its plans in early September.