How parent of BMW's China partner drove to the brink of bankruptcy

BEIJING: In October 2003, the first China-made BMW 325i sedan rolled off a new production line owned by the German luxury brand and its joint venture partner, Brilliance, a subsidiary of provincially owned automaker Huachen Group.

"Management's key selling point to BMW to win the partnership was simple: as a smaller and weaker Chinese company, Brilliance will follow what BMW says without making trouble," said a person close to Brilliance's top management at the time, declining to be named given the sensitivity of the matter.

Chief Accountant Gao Xingang said that as a"dragon head", or leading, automaker in Liaoning province, Huachen enjoyed strong local government backing, according to meeting minutes seen by Reuters. "We thought we would be the first domestic carmaker to sell premium cars well in China," said a former Huachen executive who now works for another Chinese carmaker.

"Zhonghua did not plan its products systematically," he said."That made their products fail to meet the fast-changing market demand in China."About a decade ago, consultants hired by Huachen warned it against plans to develop a premium MPV , citing competition, an unclear outlook for the segment and Huachen's technology disadvantage compared with the popular Buick GL8 made by General Motors Co.

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