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Last Updated: Tuesday, 17 February, 2004, 11:10 GMT
Hyundai in landmark China export deal

By Francis Markus
BBC correspondent in Shanghai

Hyundai Sonata
The Hyundai Sonata: Made in China
South Korea's largest car maker Hyundai has signed a contract to export 19,000 cars built by its Beijing joint venture to Russia.

A spokesman for the joint venture declined to give details.

But the deal is reported to be Communist China's biggest ever car export agreement.

China has long been an exporter of trucks and buses, mainly to developing countries. But its car exports are still in their infancy.

The agreement to export Chinese-made Hyundai Sonata cars to Russia is reported to be the biggest of its kind since the founding of the People's Republic in 1949.

Export ambitions

For now, most foreign car makers are excitedly focused on China's domestic car market.

It's the fastest growing market in the world as a middle-class with unprecedented spending power emerges, even if the potential for selling cars to hundreds of millions of rural Chinese, whose incomes are getting left behind, is limited.

But some car makers already have their sights on China's potential as a base to produce cars for export.

Japan's Honda has been building a plant in southern China to produce cars exclusively for foreign markets.

Compared with other export industries which have flourished in China, the costs of auto production here remain high and the competitive advantage doubtful.

But in the medium to longer term, analysts believe China could well emerge as a significant base for car exports.


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