OREANDA-NEWS. October 31, 2012.   Chery Automobile and Guangzhou Automobile Group will sign a strategic cooperation agreement next month, the Securities Daily reported today. However, specific details regarding the agreement have yet to be announced.

According to internal sources, Chery and GAC began discussing possible cooperation as early as 2010. However, for various reasons a partnership between the two enterprises failed to come to fruition. Sources close to the matter were recorded as stating that declining sales growth rates in 2011 forced Chery to seek out GAC to restart discussions. Now, with economic backlash from the Diaoyu Island dispute affecting GAC's sales, it seems both sides are ready to begin exploring possibilities for a potential alliance.

According to some reports, GAC Group Board Chairman Zhang Fangyou has already paid a visit to Chery's headquarters in Wuhu, Anhui to discuss the issue with the manufacturer's Board Chairman Yin Tongyue. GAC Group Deputy General Manager Yuan Zhongrong has also commented on the importance of strategic cooperation at last month's Global Automotive Forum.

The Chinese government has previously encouraged automobile enterprises in the country to merge in order to help boost development in the industry and spur economic growth.