China seizes illegally built plant of Buffet-backed automaker

Oct 13, 2010, 11:10 GMT

Beijing - The Chinese government has seized a factory complex being built by carmaker BYD Co, the Ministry of Land and Resources said on Wednesday, claiming it did not have the required permission.

The ministry said BYD was fined 2.95 million yuan (442,000 dollars) after the partially built factory near the north-western city of Xi'an was confiscated.

The factory was being built on agricultural land after approval by local authorities, but the ministry overruled the approval, it said in a notice published on its website.

BYD Group, short for Build Your Dreams, is new to carmaking, having previously specialized in batteries for mobile phones and electric vehicles.

US venture capitalist Warren Buffet holds a 10-per-cent share in the company.

Earlier state media reports said BYD started construction last year on a 5-billion-yuan (750 million dollars) complex on about 300 hectares of land near Xian.

The plant had been scheduled to begin production next year and produce up to 400,000 vehicles annually by 2013, the Economic Observer newspaper said.

When construction was suspended in July, BYD said in a statement to the Hong Kong stock exchange that the issue would have no 'material adverse impact' on its business.

The Economic Observer quoted sources as saying BYD had failed to follow proper procedures in its haste to develop the land.

The company currently operates two plants in Xian and the southern city of Shenzhen with a combined capacity of 500,000 units, the newspaper said.

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