According to a Dow Jones report, Tianjin Automotive Xiali Co. has received government approval for the transfer of a controlling stake in Tianjin to FAW from Tianjin’s previous parent.

First Automotive Works, one of China’s top three carmakers has therefore taken a controlling 50.98% stake in Tianjin Automotive Xiali Co. The consolidation move is being interpreted as a reaction to more competitive market conditions and China’s entry to the WTO.

The Chinese government has said in the past that it wants to create two or three globally competitive car producers to strengthen a fragmented industry.

Toyota has a venture with Tianjin Automotive Xiali with which it plans to make 30,000 small cars annually in China, basing the first Chinese-built Toyota model, the 1.5-liter T-1 compact on sale in October, on the Toyota Vitz/Yaris/Echo compact.