Nissan to Repatriate $1.1 Billion Cash from China Unit

Nissan Motor Co. reportedly will repatriate 7.5 billion yuan ($1.1 billion) from its joint venture in China as tensions rise with alliance partner Renault SA.

Sources tell The Nikkei that the transfer could be completed by the end of January. One source says the company’s Chinese partner, Dongfeng Motor Group, was told in June that the funds would be moved as a profit distribution, although no timetable was given at the time.

Such funds normally have been reinvested to avoid Japanese taxes, according to The Nikkei. Its sources figure the transfer will cost about $100 million in taxes.

Nissan insists that the transfer is routine. But it comes as the future of the 19-year-old Renault-Nissan-Mitsubishi alliance grows uncertain following last month’s arrest of Carlos Ghosn, then chairman of all three companies, on suspicion of grossly understating his compensation. He has since been removed as chairman of the two Japanese companies.

The Nikkei says Renault, which has been maneuvering toward a merger with Nissan, is furious that the Japanese company could use Ghosn’s ouster as an excuse to exit the alliance instead.

Renault and Nissan launched the partnership in 1999 when Nissan was near bankruptcy. Renault ended up with a 43% voting stake in Nissan. Nissan acquired a 15% nonvoting share in Renault and was led back to financial strength by Ghosn, a Renault executive.

Now Nissan accounts for roughly 60% of the alliance’s sales and has been pushing for a more equitable arrangement with Renault. Nissan says there is “no intension whatsoever” to use the repatriated funds from China to buy shares in Renault.

Such an attempt would be akin to war, The Nikkei says, citing an unnamed French government official. The French state owns 15% of Renault.