Global component maker Hanon Systems has announced to set up a new joint venture with China South Industries Group Corp (CSGC) for its growing business in the Chinese market.

The JV involves a direct partnership with Chongqing Jianshe Motorcycle and Chongqing Jianshe Mechanical & Electrical Equipment, the two subsidiary companies of CSGC.

CSGC under the new JV will set-up manufacturing in Chongqing and will also supply conventional air conditioning and eco-friendly solutions to Changan Automobile Group, a subsidiary of CSGC. As per the proposal in the initial stage, the plant will supply automotive variable compressors and heat pump systems. Future plans include 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.

The three partners have agreed to invest a combined total of $64 million (Rs 404 crore) in registered capital. Hanon Systems having 50 percent interest stake in the joint venture; Chongqing Jianshe Motorcycle will own 25.36 percent; and Chongqing Jianshe Mechanical and Electrical Equipment will own the remaining 24.64 percent.The set-up of the JV is expected to be completed by the end of 2017, pending formal approval by the China government.