Is Lincoln planning to open a factory in China?

Lincoln may soon start building cars in China, but how it approaches that may be different from carmakers who have already entered the market.

Ng Han Guan/AP/File
A staff member stands near a Lincoln MKZ Sedan on display during a press event in Beijing, China (April 17, 2014).

Lincoln may soon join the increasingly long list of luxury automakers building cars in the world's largest car market: China.

The luxury division of Ford Motor Company [NYSE:F] is in talks with Changan Automobile Group of China for the new factory, reports Bloomberg.

It isn't clear what models Lincoln would build in China.

Building cars in China for consumption there is a strategic move that helps automakers shield themselves from hefty taxation on imports of up to 25 percent, but it isn't as easy as simply opening up a factory. Instead, China requires foreign automakers to partner with a local firm run at least in part by the state government.

The report suggests Lincoln could be building cars in China as soon as 2018, and it also indicates the automaker could use a plant there to serve as an export hub to other markets in Asia. Lincoln has seen substantial growth in China since launching there in 2014, although it still lags significantly behind German luxury brands and Detroit rival Cadillac in the market.

Lincoln has attempted to tap a niche in China where customers buy luxury products for their own personal experience rather than as an object to simply show off. To differentiate itself, Lincoln offers tailored services to customers as well as a focus on technology and unique product.

For example, Lincoln has a warm and welcoming environment in its showrooms which come complete with a tea room. The company also provides complete sales and service transparency. It seems to be working as Ford CEO Mark Fields predicts China will take over the U.S. as Lincoln's top market as early as the end of this decade.

Every other major luxury brand builds cars in China, but only a handful actually export vehicles from there. Volvo began exporting a specific trim level of its S60 sedan from China to the United States recently, while mid-level Buick is now building its mainstream Envision crossover there for sale in the U.S.

This article first appeared at MotorAuthority.

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