The new joint venture between American Motors Corporation and China represents the type of international accord that corporate executives sit up late at night dreaming about. AMC will now be coproducing Jeeps with China at a plant in Shanghai - which means that at some point not too far off AMC will likely be able to export some of those vehicles to other Asian nations in direct competition with Japan, which now dominates the Asian four-wheel-drive market.
But there is another element that is important in a political sense. Despite all the irritants between the United States and China in recent weeks, stemming from the US decision to grant asylum to tennis star Hu Na as well as Chinese criticism about American arms sales to Taiwan, the two countries are prepared to cooperate where possible. According to James Stepanek, editor of the China Business Review, the joint venture suggests that Peking wants to stress the importance of a continuing bilateral commercial relationship. Indeed, given the profound ideological, cultural, and political differences between the two nations, such a commercial relationship provides a limited but useful link.
Peking has taken a number of important steps in recent months to encourage joint ventures. It has lowered the withholding tax rate, which enables overseas firms to repatriate profits more easily than was the case in previous years; and it has waived import duties on raw materials and equipment used in joint ventures. These efforts towards accommodation in the commercial sphere indicate how eager Peking is to develop more joint ventures after the dropoff in such activity in 1981 and 1982, in large part because of world recession and concerns on the part of some overseas firms that China was too difficult to deal with in business arrangements.
The AMC-China accord is only one of a number of large-scale ventures now in progress. R.J. Reynolds, Occidental Petroleum, and Avon Products are among the US firms participating in such ventures. Firms from other nations are also involved, including Volkswagen of West Germany, which will be producing a new passenger car in 1988. The AMC agreement, however, is the first between China and a US automaker. Ford has been seeking an agreement to produce trucks and tractors.
China and American Motors deserve plaudits for working out a commercial alliance that can only prove beneficial to everyone involved.