MILAN, April 15 (Reuters) - Italy's Piaggio will make its famous Vespa scooters and spare parts in China as it aims to carve out a niche in the world's biggest motorcycle market and expand to South Eastern Asia, Piaggio said on Thursday.
Piaggio and Chinese motorcycle maker Zongshen Group have signed a strategic agreement to produce more than 300,000 vehicles annually targetting a 180-200 million euro turnover, Piaggio owners IMMSI group said in a statement.
Under the deal, Piaggio would trim its stake in the existing Chinese joint venture Piaggio Foshan Motorcycle (PFM) to 45 percent from 75 percent to make room for Zongshen which would hold another 45 percent in the company.
The municipality of Foshan in southern China's Guangdong province, another current partner in the joint venture which now makes engines, would hold a 10 percent in the renewed firm. Diversified production would be launched at the start of 2005.
PMF would sell its output, including engines and motorcycles produced under Piaggio licence, through Zongshen's dealers in China. Piaggio Group would be in charge of international sales.
"The new joint venture represents for Piaggio a basis for further development in commercial activity on international markets, especially in the Far East," Roberto Colaninno, Piaggio's new chairman said in a statement.
Colaninno's holding company IMMSI took over Piaggio last year, aiming to recover the scooter maker's market share and exploit Asian markets.
Piaggio, which operates plants in Italy, Spain and India and whose commercial network covers 55 countries, sold 430,000 vehicles last year making 987 million euros in sales.
Privately owned Zongshen Group made 1.7 million vehicles and three million engines last year, raising more than 830 million euros in sales, IMMSI said.