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Last Updated: Saturday, 20 November, 2004, 16:08 GMT
MG Rover on brink of China deal
MG Rover chairman John Towers
Chairman John Towers is confident the deal will go ahead
MG Rover is on the brink of a 1bn deal with a Chinese company that will help secure the future of its giant Longbridge plant.

Under the joint venture with the Shanghai Automotive Corporation, a new company will be set up to produce cars for the fast-growing Chinese market.

The partnership would combine British technology with foreign investment.

But MG Rover chairman John Towers insisted Longbridge would remain entirely in British hands.

'Engineering development'

He added that by 2007, he hopes to build 200,000 cars a year in China for the country's domestic market.

Although not due to be finalised until January, Mr Towers said he was confident the deal, which would see the Chinese company owning 70% of the new company and MG Rover 30%, would go ahead.

He told BBC Midlands Today: "All the work associated with the joint venture is going on - the funding, the provision of people, the engineering development - they are happening."

In the four years since BMW sold MG Rover to the consortium led by Mr Towers, losses have been reduced but they are still running at 77m.

He also promised the 6,100 workers based at Longbridge there would be a massive roll-out of brand new cars as soon as Chinese money filters through.

Major investment

Mr Towers said these new models could be on the road in just 14 months time.

There's a misconception that the firm will, as a result, become Chinese owned and controlled but that's not true
Robin Punt

Experts say MG Rover cannot survive without major investment in research and development.

MG Rover spokesman Stewart McKee said: "We do need the final approval of the Chinese authorities in order to proceed and that's the point at which the final details will emerge."

He added: "For both parties, this is a very good agreement.

"For MG Rover, we get the opportunity to sell cars in China, which is an expanding market. It also allows us to jointly fund the development of new products which is key to the growth of the business."

'Excitement'

BBC Midlands Today correspondent Robin Punt said many people would be surprised to hear money is already arriving from China.

"There's a misconception that the firm will, as a result, become Chinese owned and controlled but that's not true," he said.

"The mood among workers at Longbridge is excitement that their future is secure, although the deal has yet to be finalised.

"But they're also angry that many sections of the British media have run-down the company."

He added: "Managers have already been briefed on some of the details of the Shanghai joint venture but they've been told not to reveal what they know."

We had hoped this would be an equal partnership, but obviously we hope this will enable Longbridge to stay open
Tony Murphy, Amicus

Transport and General Workers Union General Secretary Tony Woodley said: "Any developments for MG Rover which would secure further finance to invest in new models and secure jobs would be welcomed by the union.

"We will have to wait for details of the Chinese deal but securing the future is a positive development."

Tony Murphy, national officer of the Amicus union, said he was disappointed that the Chinese firm would have a majority holding.

He said: "We had hoped this would be an equal partnership, but obviously we hope this will enable Longbridge to stay open."

Mr Towers leaves for the start of the final round of negotiations in China within the next two weeks.


BBC NEWS: VIDEO AND AUDIO
British workers set to build cars for the Chinese market



SEE ALSO:
BMW chief criticises Rover bosses
12 Nov 04 |  Business
Rover cuts losses but sales fall
28 Oct 04 |  Business
MG Rover pins hope on Chinese deal
28 Oct 04 |  Business
MG Rover dealt further sales blow
06 Oct 04 |  Business
MG Rover sees monthly sales slump
07 Sep 04 |  Business


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