According to recent media reports, Dongfeng Motor reportedly approached the State-owned Assets Supervision and Administration Commission (SASAC) in an attempt to reverse the acquisition of Hafei. Senior officials from the Civil Aviation Administration of China (CAAC) confirmed that CATIC’s decision to enter the automobile sector is firm and irreversible. Internal preparations by Hafei for its integration into the new CAAC have been well-received, with one source stating, “The current collaboration between Dongfeng and Hafei is no longer viable. Negotiations have been put on hold and will eventually be terminated.” Following rumors of potential cooperation between East-Kazakhstan and Hafei, it was also reported that PSA was interested in forming a joint venture with Hafei to overcome its struggles in the Chinese market. However, according to an insider from AVIC, while initial discussions are ongoing, the new CAAC hopes that PSA will re-evaluate its relationship with Dongfeng. Meanwhile, the joint venture between Dongfeng and Volvo has once again been delayed due to unresolved issues regarding Nissan's equity stake. The negotiations were originally based on Dongfeng Commercial Vehicle Company as the main partner, which is jointly owned by Nissan and Dongfeng Motor. For the deal to proceed, Dongfeng must hold at least 50% of the shares, and retaining Nissan's involvement became a critical factor in the success of the partnership. **Analysis Review** 1. In existing joint ventures and collaborations, most projects involve companies that are either in the second-tier segment or focus on non-mainstream products—such as Hafei, Young Auto, Iran’s IKCO, and Dongfeng Volvo’s heavy truck initiatives. This highlights how the Chinese auto industry is evolving into a more mature market, where key players are already established, and available resources for partnerships are becoming scarce. As a result, joint ventures are growing increasingly complex and difficult to finalize. The earlier success of the Nissan-Dongfeng joint venture left Dongfeng with fewer options when negotiating with Volvo, leading to another five-year delay. 2. Under these circumstances, stronger partners are no longer prioritizing joint ventures, and some collaborations have become symbolic or lack real value. Unequal power dynamics often lead to aggressive demands from one side, making it harder to reach agreements. For example, Young Auto abandoned its plan to bring in the IKCO Samantha model because it was outdated and couldn’t compete effectively in the Chinese market. 3. These challenges are closely tied to the characteristics of the Chinese automotive market, which is still in a quasi-mature phase, with the government maintaining a semi-controlled position. The approval system for joint ventures, product announcements, and leadership appointments all reflect the government’s influence. This has made joint ventures highly complex. For instance, the Dongfeng-Renault project faced delays due to local government interference. Meanwhile, the low-key acquisition of Hafei by Dongfeng coincided with the launch of the national "Big Aircraft" project. Both parties believed the new AVIC would take over Hafei, leading to price competition and uncertainty. However, the ambitions of the new AVIC ultimately disrupted Dongfeng’s integration plans and cost the company a valuable opportunity. Related topics: Dongfeng Group announced that it will hold "Hafei."

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