Global automotive supplier Hanon Systems plans to establish a joint venture with China South Industries Group Corporation (CSGC) to support its growing business in the China market.

The new joint venture involves a direct partnership with Chongqing Jianshe Motorcycle and Chongqing Jianshe Mechanical & Electrical Equipment which are two subsidiary companies of CSGC.

Manufacturing to support this joint venture will be based in Chongqing and supply conventional air conditioning and eco-friendly products to Changan Automobile Group, a subsidiary of CSGC. Initially, the plant will supply automotive variable compressors and heat pump systems. Future plans include the production of heating ventilation and air conditioning (HVAC) modules and powertrain cooling components.

Changan Automobile is one of the top automotive groups in China that operates a number of vehicle brands and auto part subsidiaries through joint venture partnerships including Changan Ford, Changan Mazda and Changan Suzuki, in addition to its own brand.

Completion of the new joint venture is expected by the end of 2017, pending formal approval by the China government. To support the joint venture, the three partner companies will spend a combined total of CNY420m (US$64million) in registered capital.

Hanon Systems will hold a 50% stake in the joint venture; Chongqing Jianshe Motorcycle will own 25.36% and Chongqing Jianshe Mechanical and Electrical Equipment will own the remaining 24.64%.