Honda's Chinese unit, Guangzhou Honda Automobile Co., and Guangzhou Automobile Group Co. of China began operation of their new factory on Tuesday.

The new factory is capable of making 120,000 vehicles a year. The joint venture brings Honda's total production capability in China to 530,000 units per year, which ranks first among Japanese car manufacturers in China.

The total investment required for this latest venture was 2.2 billion Yuan ($277 million). The partners used machinery from Chinese makers in an effort to reduce costs. In addition, the factory also contains an eco-friendly water circulation system which reduces waste.

The new plant will produce Accord sedans for the time being.

Honda's President Takeo Fukui was enthusiastic about the company's growth.

"While other companies work to reinforce their output capacity, even maintenance of competitiveness and status quo are difficult today, he said, expressing pride in the company's active development.

China