ITOCHU Corporation (headquartered in Minato-ku, Tokyo; Masahiro Okafuji, President & CEO; hereinafter “ITOCHU”) is partnering Yitong Used Cars Co., Ltd. (headquartered in Shenzhen City, Guangdong Province, China; Zhan Guohong, Chairman; hereinafter “Yitong”), Aucnet Inc. (headquartered in Chiyoda-ku, Tokyo; Kiyotaka Fujisaki, President & CEO; hereinafter “Aucnet”), and Orient Corporation (headquartered in Chiyoda-ku, Tokyo; Masayuki Saito, President & CEO; hereinafter “Orico”) to enter the used vehicle auction business in Shenzhen City, China. ITOCHU has made a capital contribution through its Hong Kong-based finance business subsidiary ITOCHU Finance (Asia) Limited (headquartered in the Hong Kong Special Administrative Region of the People's Republic of China; Chiharu Higuchi, Managing Director; hereinafter “IFA”) and Aucnet has made a capital contribution through its wholly owned subsidiary Aucnet HK Limited (headquartered in the Hong Kong Special Administrative Region of the People's Republic of China; Chiaki Fujino, President & CEO; hereinafter “Aucnet Hong Kong”), and the four companies IFA, Aucnet Hong Kong, Orico and Yitong recently entered into a joint venture agreement, agreeing to establish Shenzhen Baitongpai Automobile Service Co., Ltd. (hereinafter “Baitong”), a joint venture using Chinese and foreign investment.

In China, growth in new vehicle sales is expected to lead to growth in used vehicle sales in the future. Baitong will seek to promote the circulation of used vehicles in China by introducing the used vehicle auctions that are needed to optimize used vehicle sales, and will work to commercialize the used vehicle auctions. The four companies IFA, Aucnet Hong Kong, Orico and Yitong plan to use their business assets and connections to enter the used vehicle auction business through the soon-to-be-established joint venture Baitong and to expand the used vehicle auction business with the participation of used vehicle dealers and used vehicle brokers.

Baitong will aim to optimize the circulation of used vehicles by introducing systemized used vehicle auctions that are currently the norm in Japan instead of the auctions held using hand signals which are currently the norm in China. Aucnet is in charge of the auction system development and has employed a communication system different from that used in auction systems in Japan. The highly efficient, low environmental load system uses the most advanced cloud computing technologies to achieve stable operation in Shenzhen China with little capital expenditure in a short space of time.

In this business, Aucnet will provide the joint enterprise with expertise gained from its online auction operations in Japan and vehicle inspections, another area of strength. Yitong is already engaged in the business of running a used vehicle exchange market in China and rents market space to a many used vehicle dealers and brokers, and it will provide the joint venture with a venue for site-based used vehicle auctions and connections with the used car dealers that rent market space.

ITOCHU and Orico will actively participate in the running of the business, drawing on their experience of doing business in Japan and overseas. They will help optimize the circulation of used vehicles by making auctions more widespread, while remaining open to the possibility of starting up a used car finance business for dealers and users in China in the future.

China’s used vehicle market

In China, with around 19 million new vehicles sold each year, the number of vehicles owned has grown rapidly in recent years. Although used vehicle sales are trailing new vehicle sales and the second-hand market is still developing, due to replacement demand, explosive growth in used vehicle sales is expected in the future.
- New vehicle sales in China in FY2012 About 19 million units
- Used vehicle registrations in China in FY2012 About 4.8 million units
- Vehicle ownership in China at the end of 2011 About 93.5 million units (2nd in the world)
(The United States ranks 1st in the world with around 250 million units, while Japan is in 3rd position with around 75 million units)

Outline of the joint venture

Outline of Yitong

Outline of Aucnet

Outline of Orico