Proton is being sued by China's Goldstar Heavy Industrial over the collapse of their joint venture plan to build vehicles in China, according to a Malaysian newspaper report.

The Star daily said Goldstar had started legal action in Guangdong province, seeking about CNY1bn in compensation over the failed venture.

The two companies were to have produced vehicles in a plant in Dongguan province, but Proton reportedly said Goldstar failed to obtain a licence for the joint venture.

Goldstar's legal action contravenes "the agreed arbitration process", Proton told the newspaper, adding that arbitration had been due to be held in Singapore in March.

The Star said Proton had instead signed an agreement to partner with another Chinese firm, Jinhua Youngman Automobile Manufacturing, with a goal of selling 30,000 units of its Gen-2 model in China.

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