The Big Read – Dongfeng (4/6) – The many roads that lead to Dongfeng-Nissan – CarNewsChina
Nissan is the most important foreign partner of Dongfeng. Both companies are so much intertwined that it’s hard to see who is who in the story. And there are many twists and turns, which makes the story difficult to tell. I could do it chronologically, but many storylines cross each other all the time. I could do by entity, but ownership and responsibilities keep changing. I could do it by brand, but some entities produce several brands and some brands are made by different entities. So this is my best possible attempt. You better stay focused.
Zhengzhou Light Vehicle Factory
As a remnant of the old regime, the National Army’s 12th Auto Repair Factory in Zhengzhou (Henan province) merges with Kaifeng Auto Repair Factory in 1949 to become Zhongyuan Highway Bureau Auto Repair Factory. This factory makes auto parts. What’s the relevance, you might ask. Well, this is the predecessor of Nissan’s first joint venture partner in China. But before we come to that, there’s quite a long way to go.
Zhongyuan develops its own light trick in the sixties and when production commences in 1969, the company changes its name to Zhengzhou Automobile Manufacturing Plant, we’ll call it Zhengqi for short. The Zhengzhou 130 truck is a flawed product. It has several design faults, structural defects and below-standard performance. But because Zhengqi is the only credible vehicle maker in Henan, it survives on the low sales for a few years.
- Zhengzhou ZZ130, based on the Beijing truck
- Production at the Zhengzhou factory
In the early seventies Beijing Second Automobile Works develops a 2-ton truck, ‘benchmarked against’ the Toyota Dyna. This becomes of course the ever-present Beijing BJ130. The project is set up from the beginning as a ‘National Truck’. No less than 47 parts and light truck companies participate in the BJ130 ‘experience meeting’, organized by the Ministry of Machinery, and all go home with a full set of drawings. Zhengqi is one of them. In 1975 they replace their own truck with the BJ130 design. And this is an instant success, by 1979 production reaches almost 1,500 trucks per year.
In the early eighties the planned economy is abolished, entrepreneurship encouraged, and the BJ130 being pretty much “open source”, competitors to Zhengqi spring up everywhere in the country. By the dozens even, many of them producing below Zhengqi’s cost. So the company becomes loss-making and has to let go half of 4,000 employees. Therefore Zhengqi joins Dongfeng Motor Industry Association in 1983 and start producing EQ140 trucks and EQ643 buses. The financial problems vanish.
In 1985 Zhengqi and Dongfeng jointly develop a heavier, 3-ton truck, the EQ1060. It sells well and raises Zhengqi’s profile. For strategic reasons the company decides to pursue a joint venture with its partner. Which is in line with Dongfeng’s corporate strategy at the time, so in late 1987 Zhengqi becomes a joint venture between Dongfeng and Zhengzhou authorities. For the occasion, the enterprise name changes to Zhengzhou Light Vehicle Factory.
And then history repeats itself. The EQ1060 is produced throughout the Dongfeng conglomerate, components are easily available and Zhengqi faces another decline. Without funds to conduct its own R&D, the company sees only one way out: acquire it from a foreign party. And that’s where Nissan enters the picture. Nissan itself is also facing financial headwinds, so the joint venture between the two is built on a lot …….