The world's second largest carmaker Toyota is the latest in a line of foreign auto companies to realise the potential of a Chinese portal and open a vehicle manufacturing plant in the country.

In setting up a 50:50 venture with China's fourth largest auto maker Guangzhou Automobile Group, the Japanese car giant follows in the footsteps of General Motors, Honda and Ford, who have long been established in China.

The $461 million (€381m; £259m) deal will manufacture Toyota's Camry saloon car in the city of Guangzhou. With a proposed production date of 2006, it forms part of a $13bn long-term strategy to triple the company's Chinese capacity by 2010.

Despite healthy forecasts for the Chinese car market [WAMN: 07-Sep-04], some auto consultants are worried about over-capacity and foreign dominance.

"The short-term concern is that the market is no longer thundering along as it was", says Graeme Maxton, head of strategy consulting firm Autopolis, adding, "At some point those conflicting forces - the Chinese government on one side and the foreign companies on the other - are going to come into some sort of battle."

Toyota's evp Kosuke Shiramizu, however, seems unconcerned. After hinting that the company is considering a move into the car loan market, he opined: "The China market is very big. We are looking for the long term."

Data sourced from: BBC Online Business News (UK); additional content by WARC staff