Hertz Likely to Sever Ties with Chinese Partner

SHANGHAI --- Hertz Rental Corp. is likely to sever ties with its Chinese partner, prohibiting the company from using its brand, the Shanghai Daily reported.

Sources told the newspaper that the halt would be imposed just five months before its agreement with China National Automobile Anhua International Trade Co. is set to expire.

Hertz entered the Chinese market through a franchise deal with Anhua in January 2002 to bypass Chinese regulations that prevent foreign car rental firms from opening wholly owned operations in the country.

Aside from the brand name, Anhua’s franchising fee paid for training course and management, which Hertz provided.

According the five-year contract, set to expire in July, Hertz could halt cooperation at any time if Anhua failed to meet the company's outlined targets, such as branch expansion, the newspaper report said.

The failed relationship likely stemmed from Anhua’s inability to monitor branch operations, and its lack of capital, according to the report.

Last year, Ford Motor Co. sold Hertz to an investment group with partners including Clayton, Dubilier & Rice, Carlyle Group and a Merrill Lynch and Co buyout unit.

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