Amid disputes and the announcement of project termination between Holland Car Plc and its Chinese part suppliers, the latter announced on Monday that it is making preparations to launch its own car assembly plant with an outlay of 300 million USD here in Ethiopia.

Officials of Lifan warned Holland Car not to use any parts of its products and any intellectual property it has secured.

Project Manager Andy Pan told a press conference held at Harmony Hotel that Lifan Company would start its car assembly operation early next year and would strive to play a big role in Ethiopian market.

However the company has not so far secured the investment land lease although it has registered a one million USD initial capital for two years. When the project starts production at full capacity, it will have a capital of some 300 million USD, the company announced.

According to Pan, Lifan has already awarded Yangfan Ethiopia Plc to exclusively distribute its products, parts and provide the services.

"Many of the premises that both parties entered into in the Exclusive Agency Agreement no longer apply, and no common ground could be found. All means of trying has been exhausted," Lifan officials said adding that they terminated the Agreement in June of 2009," he said.

"Starting then, Lifan would no longer supply any form of spare parts or technical support to HC, and HC could not use the LifanBrand or any intellectual property of Lifan," he told the press conference and went on to add, "Given the fact that the two model names, ABAY and AWASH, have been registered by HC in Ethiopia, all Lifan cars would not use those names, and would restart to use our original names, 520 and 620 instead." In late 2007, Lifan entered cooperation agreement with HC, started to supply them with vehicle parts, and provided the necessary technical support in assembling and after sale services. In the meantime, HC began to locally assemble the cars, sell and service the cars as distributor including Lifan 520 and Lifan 620 which were also renamed ABAY and AWASH.

Andy Pan, Project Manager, of Lifan confirmed that it demanded a share in Holland Car but they could not reach an agreement as the latter offered "too much and unaffordable bill." But he declined to state how much Lifan was offered.

"And all the business interests of Lifan would be transferred to Yang Fan. Hence, YF is the only legal representative and distributor of Lifan," he noted adding that Lifan would supply the parts and provide the necessary technical support to YF.YF would assemble the cars locally and in the meantime, it would also be in charge of all the retail sales and after sale services.

According to him, the new company has a plan, with its center in Ethiopia and YF would eventually export some of the locally assembled cars to neighboring East Africa countries including Djibouti, Somalia, Kenya, Sudan and Uganda.

But the company further disclosed that Lifan welcomes any interested parties and local partners to form a joint-venture corporation, including HC.

Holland car General Manger, Eng. Tadesse Tessema on his part said his company has already dealt with the problems regarding the parts and services after it terminated the exclusive agreement with Lifan.

"We have been buying spare parts from Lifan. But after our termination we began buying these parts from the original manufacturer where Lifan itself buys and used to sell to us. Now we have already bought all the parts we need and we no longer need anything from Lifan." Asked if HC would reconsider its decision regarding partnership with Lifan once again since Lifan has offered partnership, Eng. Tadesse said "They first sent us termination letter to break the relation they had with us. We have been trying to make them reconsider their decision. But we don't think we will work with them again." He also told The Daily Monitor about his company's position on the future prospect of the market and the potential competition when the new company begins production.

"As long as they follow a proper and fair competition in the market we don't have any problem. Let them be honest and let them invest. But the competition should be fair rather than a hit and run type," Tadesse said.

After the break up of their partnership with Lifan, Holland Car signed an agreement with the Chinese automobile factory called Anhui Jianghuai Automobile Co. Ltd.

In a related development, The Daily Monitor learned that Holland Car secured nomination in the shortlist as one of the five finalists for the Most Innovative Award of the 2009 Africa SMME awards which is going to take place on the 15th October, 2009 at Cape Town.