(Yicai Global) Aug. 11 -- Xinquan Automotive Trim plans to invest USD6 million to set up a unit in Mexico that will produce auto parts and components.

USD4 million of the investment will be the new company’s registered capital, theDanyang, Jiangsu province-based parts maker said in a statement today.

The move will help Xinquan better serve its customers, explore overseas markets, improve its advantages amid market competition at home and abroad as well as enhance its overall competitiveness, the firm said.

NamedXinquan Mexico Auto Parts, the wholly owned subsidiarywill beregistered atAguascalientes, the capital ofMexico’sAguascalientesstate. It will research, design, develop and make products. Xinquan Development Hong Kong, another unit, will be responsible for setting it up.

XinquanAutomotivesaid that opening a new firm in Mexico requires Chinese regulatory approval. Impacted by policy changes in both countries as well as the macro-economy, market environment, management and other factors, its new unit may face some operational and management risks, the firm added.

Xinquan also said the new unit’s production costs may fluctuate due to changes in foreign exchange rates resulting from shifting market demand for imported products and raw materials that are essential for making auto parts.

Shares of XinquanAutomotive[SHA: 603179] closed little changed today at CNY27.7 (USD4) apiece.

Editor: Peter Thomas