FORD Motor Co has formally linked up with a mainland partner in its first China venture - a US$40 million investment to make minivans with Jiangling Motors Corp.

The United States vehicle manufacturer will take up B shares in the Chinese company, which produces cars with Japan's Isuzu Motor. The deal enables Jiangling almost to double its output capacity and gives it the rights to Ford trademarks in China.

Yesterday's announcement follows a US$1 billion Mercedes Benz mini-van venture deal announced last month.

Jiangling, based in Nanchang, Jiangxi province, is allocating 80 per cent of its 174 million new B shares to Ford, giving the US company a 20 per cent stake in the firm.

Ford said it would jointly develop with the Chinese light-truck maker a new generation of vehicles using Ford technology.

Under the agreement, Ford will acquire 138.64 million foreigners-only B shares offered by Jiangling at about 28.85 US cents a share.

Wayne Booker, executive vice-president of Ford Motor International Automotive operations, said: 'Our investment in Jiangling is a major and long-term commitment to our participation in China's car industry.' The deal is one in a string of ventures in which foreign car firms have been taking strategic slices of mainland firms in the sector.

German industrial giant Bosch plans a series of investments, including a six per cent stake in fuel-injection equipment maker Wuxi Weifu.

This followed a move by Japan's Isuzu and Itochu Corp to buy into Shanghai-listed Beijing Light Bus.

Mr Booker said the purchase of B shares in a Chinese car company was a more effective way to gain entry in the sector than direct investment in joint ventures.

The two companies will jointly develop new vehicles which, according to Jiangling chairman Sun Ming, would mainly be minivans.

'We want to develop new products such as minivans and minibuses with facilities that could well be used into the next century,' Mr Sun said.

He said 60,000 more vehicles would be produced with Ford joining the company, taking the output total to the 100,000 mark a year.

This will enable the company to comply with the industrial policies of China in the car sector.

According to a statement, the two parties will share their technologies and know-how to develop a new line of vehicles using Ford designs and existing Jiangling components. The models will be produced by Jiangling for sale in China and for export.

Jiangling will acquire the right to use Ford's trademarks in connection with the jointly developed line of vehicles on a non-exclusive basis.

Ford will also act as the distributor for all products jointly developed with Jiangling in places other than on the mainland.

Under the agreement, Jiangling can distribute the jointly developed products in places other than China where Ford does not have any authorised dealership.

Mr Sun said the co-operation with Ford signified a milestone in Jiangling's development.

It enabled Jiangling to team up with one of the world's top car manufacturers to penetrate the developing market on the mainland.

It also helped to sell Jiangling's products overseas, Mr Sun said.

Jiangling makes and sells light trucks and pick-up trucks, which are produced under a technology agreement with Isuzu.

Last year, the company's net profit was 100 million yuan (about HK$93.11 million).

The company is close to finalising its listing document for listing on the Shenzhen stock exchange.

Late last year, the car-maker issued 98 million A shares to mainland investors.

This raised 352.8 million yuan for its listing on the Shenzhen stock exchange.