Proton sued by Goldstar for breach of contract
Shanghai, December 18 (Gasgoo.com) Malaysia's Proton Holdings Bhd is being sued for alleged breach of contract by its former Chinese joint-venture partner, Goldstar Heavy Industrial Co Ltd, in the Dongguan Intermediate People's Court, Guangdong Province, Proton said in a statement, reported by a Malaysia newspaper.
The Star said on Wednesday that Goldstar is seeking about one billion yuan ($147 million) in compensation over the failed venture.
Under the JV proposal that was signed in 2002, a plant was to be set up in Dongguan to produce cars in China. But Proton said in a statement to StarBiz on Tuesday that Goldstar failed to obtain a license for the joint venture within three years' time, frustrating Proton's initiatives to start manufacturing cars in China.
However, according to Goldstar, Proton wanted to form an agreement with another Chinese company, Jinhua Youngman Automobile Manufacturing Co Ltd., with a target of selling 30,000 units of Proton's GEN.2, rebranded as the EuropeStar in China.
A source in Beijing, stating Goldstar's case, told The Star that the Chinese company had bought land for the proposed plant.
"The existing plant (before the joint venture) covers 20,000 sq m and the second phase involves a plot of 60,000 sq m," the source said. After Proton signed an agreement with Youngman in 2006, production at Goldstar was ceased.
The parties agreed to arbitrate before a panel chaired by an independent person in Singapore due to be held in March, the report said.