Malaysia's Proton sued by former Chinese partner
Posted: 17 December 2008 1238 hrs

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KUALA LUMPUR: Malaysia's Proton is being sued for US$146 million by China's Goldstar Heavy Industrial over the collapse of their joint venture plan to build vehicles in China, a report said Wednesday.

The Star daily said Goldstar had started legal action in Guangdong province, seeking about 1.0 billion yuan 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", the Malaysian firm told the daily, 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.

Proton has been trying to develop export markets as it suffers a steep decline in market share in Malaysia, where it has been outgunned by imports in a newly deregulated environment.

The automaker was formed 25 years ago as part of an ambitious national industrialisation plan, but it has suffered from a reputation for poor quality and unimaginative models.
- AFP/yb