##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549
 FORM 20-F/A o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended:  December 31, 2003o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from  to
 Commission file number: 1-11412 BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LIMITED   Not Applicable
    
    Bermuda(Translation of Registrants name into English)
    
    (Jurisdiction of Incorporation or Organization)
 Suites 1602-05, Chater House, 8 Connaught Road Central, Hong Kong   Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class
    
    Exchange on which registeredAmerican Depositary Shares
Ordinary Shares, par value US$0.01 per share
    
    New York Stock Exchange, Inc.
The Stock Exchange of Hong Kong Limited
 Securities registered or to be registered pursuant to Section 12(g) of the Act:None Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None Number of outstanding shares of each of the issuers classes of capital or common stock as of December 31, 2003: 3,668,390,900 Ordinary Shares, par value US$0.01 per share 2,764,383 American Depositary Shares, each representing 100 Ordinary Shares Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ
    
    No  o
 Indicate by check mark which financial statement item the registrant has elected to follow. Item 17  o
    
    Item 18  þ




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EXPLANATORY NOTE On
June 24, 2004, Brilliance China Automotive Holding Limited filed
its annual report on Form 20-F for the fiscal year ended
December 31, 2003. At the time the annual report was
filed, an incorrect file was inadvertently uploaded. This amendment on Form 20-F/A is filed solely for the purpose of
replacing the incorrect file, which is the chart under the heading
Organizational Structure in Item 4.
Information on the Company. ii




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ITEM 4. INFORMATION ON THE COMPANY History and Development of Brilliance China Automotive Brilliance China Automotive Holdings Limited was established as an
exempted company with limited liability under the laws of Bermuda on June 9,
1992. Brilliance China Automotives principal place of business is Suites
1602-05, Chater House, 8 Connaught Road Central, Hong Kong, telephone number:
(852) 2523-7227. Brilliance China Automotive was initially established to hold a 51.0%
interest in Shenyang Brilliance JinBei Automobile Co., Ltd. (formerly known as
Shenyang JinBei Passenger Vehicle Manufacturing Company, Ltd.), or Shenyang
Automotive, currently the leading manufacturer and distributor of minibuses in
China and also the manufacturer of Zhonghua sedans. Shenyang Automotive was
established as a Sino-foreign equity joint venture enterprise on July 22, 1991.
The term of Shenyang Automotive is perpetual as a result of an amendment made
to Shenyang Automotives joint venture contract in February 2003. The other
49.0% of Shenyang Automotive was owned by Shenyang JinBei Automotive Company
Limited (formerly Shenyang Brilliance Automotive Company Limited and FAW-JinBei
Automotive Company Limited), or JinBei. On December 29, 2003, Brilliance China Automotive, through Shenyang
Xinjinbei Investment and Development Co., Ltd., or SXID, and Shenyang JinBei
Automotive Industry Holdings Co., Ltd., or SJAI, its 99.0% and 98.0% indirectly
owned subsidiaries, respectively, entered into agreements to acquire the entire
equity interests of Shenyang Automobile Industry Asset Management Company
Limited, or SAIAM, and Shenyang Xinjinbei Investment Co., Ltd, or SXI. SAIAM
and SXI own 29.9% and 11%, respectively, of the issued share capital of JinBei.
Upon receipt of the necessary governmental approvals for this transaction,
Brilliance China Automotive will have an effective interest of approximately
40.1% of JinBei, thereby increasing its effective interest in Shenyang
Automotive from 51.0% to approximately 70.7%. This acquisition is expected to
be completed in the second half of 2004. Prior to May 1998, Brilliance China Automotives sole operating asset was
its interest in Shenyang Automotive. On May 18, 1998, Brilliance China
Automotive acquired 50% and 51% equity interests, respectively, in Mianyang
Xinchen Engine Co., Ltd., or Mianyang Xinchen, a manufacturer of gasoline
engines for use in passenger vehicles and light duty trucks, and Ningbo Yuming
Machinery Industrial Co., Ltd., or Ningbo Yuming, a producer of automobile
windows and window molding and stripping. Mianyang Xinchen is a Sino-foreign
joint venture whose 50-year term will expire in 2048. Ningbo Yuming is a
wholly foreign-owned enterprise with a 50-year term that will expire in 2043. On October 12, 1998, June 9, 2000 and July 3, 2000, Brilliance China
Automotive established wholly owned subsidiaries (1) Shenyang XingYuanDong
Automobile Component Co., Ltd., or Xing Yuan Dong, (2) Ningbo Brilliance
Ruixing Auto Components Co., Ltd., or Ningbo Brilliance Ruixing, and (3)
Mianyang Brilliance Ruian Automotive Components Co., Ltd., or Mianyang
Brilliance Ruian, respectively, to centralize and consolidate the sourcing of
automotive parts and components for Shenyang Automotive, Ningbo Yuming, and
Mianyang Xinchen, respectively. In 2001, all three companies, in order to
maintain their preferential tax treatment from the Chinese government, also
began manufacturing automotive components as well. 1




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On December 11, 2000, Brilliance China Automotive acquired from Brilliance
Holdings Limited, an affiliated company, a 50.0% equity interest in Shenyang
Xinguang Brilliance Automobile Engine Co., Ltd., a Sino-foreign equity joint
venture manufacturer of gasoline engines for use in passenger vehicles and
light duty trucks. Shenyang Automotive is a major customer of each of these
companies. Brilliance China Automotive believes that the acquisition of these
components suppliers has enabled it to maintain the quality and ensure a stable
supply of certain key components required for the production needs of Shenyang
Automotive. At the end of 1998, Shenyang Automotive began to construct new production
lines for the manufacture of sedans and multi-purpose vehicles, or MPVs. These
new production lines were completed in mid-2002, and reached a total annual
production capacity of 100,000 sedans or MPVs as at the end of 2002. Beginning
in 1999, Shenyang Automotive implemented an expansion of its minibus facilities
that resulted in an increase in its annual production capacity for deluxe and
mid-priced minibuses from 40,000 units to 70,000 units in 2002 (based on two
shifts per day). The stamping and assembly workshops currently have annual
production capacities of 80,000 and 90,000 units, respectively, based on two
shifts of workers, and can be increased to 120,000 units based on three shifts.
In 2003, Shenyang Automotive constructed a new painting facility with a
capacity of 120,000 units per year. Under an acquisition agreement dated April 25, 1998 between Shenyang
Automotive and Shenyang State Assets Administration Bureau, Shenyang Automotive
was to acquire a 21.0% indirect interest in Shenyang Aerospace Mitsubishi
Motors Engine Manufacturing Co., Ltd., or Shenyang Aerospace, a Sino-foreign
equity joint venture. A revised agreement was subsequently signed on August
15, 1999 among Shenyang Automotive, Shenyang State Assets Administration
Bureau, Shanghai Brilliance Industrial Company Limited and Xing Yuan Dong,
under which Shenyang Automotives effective interest in Shenyang Aerospace was
reduced to 16.8% in exchange for cash consideration and the remaining 4.2%
effective interest was transferred to Xing Yuan Dong at cost. At the
completion of the transfer on May 25, 2000, Brilliance China Automotives
indirect effective interest in Shenyang Aerospace was 12.8%. On December 17, 2001, Shenyang Automotive entered into an agreement with
Toyota Motor Corporation for the transfer of technology relating to the fifth
generation of the Toyota minibus, the Granvia, which Shenyang Automotive
markets under the brand name Grace in China. Production of this minibus model
based on semi-knockdown kits from Toyota began in the second half of 2002 and
commercial production using domestic parts and components has commenced in the
first half of 2004. The Zhonghua sedan, designed by the world-renowned Italdesign, was
launched to the market in China in August 2002, after approval for production
and sale of the Zhonghua sedan was obtained from the Chinese government in May
2002. In December 2002, Xing Yuan Dong disposed of its entire equity interest in
the automobile-related product investment holding company, China Zhengtong
Investment Holdings Co., Ltd. to an affiliated company at cost, or Rmb 480.0
million. On March 27, 2003, Brilliance China Automotive, through its indirect
subsidiary, SJAI, entered into a joint venture contract with BMW Holding to
produce and sell BMW sedans in China. On April 28, 2003, Brilliance China
Automotive increased its effective interest in SJAI from 81% to 89.1% and
thereby increased its effective interest in the joint venture with BMW Holding
BV from 40.5% to 44.55%. On December 16, 2003, Brilliance China Automotive
further increased its effective interest in the joint venture to 49.0%. The
BMW joint venture received its business license on May 22, 2003 and introduced
the BMW designed and branded 3-Series and 5-Series sedans in October and
November of 2003, respectively, based on semi-knockdown kits supplied by BMW. 2




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Brilliance China Automotive currently has no acquisitions or divestitures
planned or pending. For additional information see Item 5  Operating and Financial Review and
Prospects  Liquidity and Capital Resources  Capital Expenditures. Business Overview Brilliance China Automotives core businesses are the manufacture and sale
of minibuses and Zhonghua sedans in China through its subsidiary, Shenyang
Automotive. We also have a joint venture with BMW to produce and sell 3-Series
and 5-Series sedans in China. In 2003, Shenyang Automotive sold a total of
74,618 minibuses and 25,600 Zhonghua sedans, representing approximately 16.9%
and 1.3% of all minibuses and sedans sold in China, respectively, during the
same period. This represented a 14.6% increase from the minibus sales volume
in 2002, and a significant increase in sedan sales due to the limited sedan
manufacturing period in 2002. Brilliance China Automotives 49%-indirectly
owned BMW joint venture also commenced production of the BMW-designed and
branded sedans and sold 4,359 of the 3-Series and 5-Series sedans in the last
quarter of 2003. Currently, Shenyang Automotive has an annual production
capacity of 80,000 units of deluxe and mid-priced minibuses (based on two
shifts per day), 120,000 units of deluxe and mid-priced minibuses (based on
three shifts per day), and 100,000 units of Zhonghua sedans (based on two
shifts per day). Shenyang Automotives production facilities are located in the industrial
city of Shenyang, the capital of Liaoning Province in northeastern China.
Shenyang Automotives principal products are the deluxe minibus, the mid-priced
minibus and the Zhonghua sedan. The mid-priced minibuses accounted for
approximately 49.1% of the total sales revenue of Shenyang Automotive and its
subsidiaries in 2003, compared with 62.8% of total sales revenue in 2002. This
percentage decrease is primarily due to the increase in sales of the Zhonghua
sedans in 2003 resulting from the first full year of production for the sedans.
The deluxe and mid-priced minibuses are 8 to 15-seat minibuses adapted from
Toyotas Hiace and Granvia minibuses. In early 2000, Shenyang Automotive successfully launched an electronic
fuel injection mid-priced minibus model, which passed the stricter gasoline
vehicle emission standards implemented on January 1, 2000 by Beijing, Tianjin
and Yunnan Province. These emission standards have since been adopted
nationwide in China. In early 2001, Shenyang Automotive began to install
multiple electronic fuel injection engines, which are currently used in all of
Shenyang Automotives mid-priced minibuses. With the installation of this
engine in the mid-priced minibus, currently all of Shenyang Automotives
minibuses meet European II emission standards. In 2004, the Chinese government
began to encourage its automobile manufacturers to meet the European III
emission standards. Shenyang Automotive expects both its minibuses and
Zhonghua sedans to meet European III emission standards in the second half of
2004. Shenyang Automotive commenced production of the fifth generation of the
Toyota minibus, the Granvia, based on semi-knockdown kits supplied by Toyota in
2003 and also commenced commercial production of the Granvia using domestic
parts and components in the first quarter of 2004. Shenyang Automotives sales volume grew 35.5% from 73,954 units in 2002 to
100,218 units in 2003. The 2003 figure includes 74,618 minibuses and 25,600
Zhonghua sedans. In addition to these sales, our joint venture, BMW Brilliance
Automotive Ltd., or BMW Brilliance, sold 4,359 BMW-branded sedans in 2003.
Shenyang Automotives sales growth in China has been supported by a substantial
network of more than 800 minibus distributors, including over 250 exclusive
minibus distributors, and over 110 sedan distributors, as well as over 330
after-sales service centers for minibuses and over 150 for 3




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sedans. Shenyang Automotive also continued to implement its 4S sales
center system, combining sales, after-sales service, spare parts and surveys in
one location. As of the end of 2003, Shenyang Automotive had over 80 4S
dealership outlets for minibuses and over 70 authorized 4S dealership outlets
for Zhonghua sedans nationwide. For the year ended December 31, 2003, Brilliance China Automotive reported
sales of Rmb 10,109.6 million (US$1,221.0 million) and net income of Rmb 780.8
million (US$94.3 million), representing an increase of approximately 38.1% and
27.9%, respectively, compared to 2002. Principal Products Shenyang Automotives principal products are (1) minibuses and (2)
Zhonghua sedans. Shenyang Automotives principal minibus products are the deluxe minibus
and the mid-priced minibus, which constituted approximately 12.7% and 49.1% of
total 2003 sales revenue, respectively. These vehicles are used primarily for
passenger transportation but can also be modified for use as police vans,
ambulances or other specialty vehicles. Shenyang Automotive sells all of its
minibuses under the JinBei brand name in a variety of models designed to meet
the requirements of particular market segments. Brilliance China Automotive
believes that Shenyang Automotives minibuses have established a reputation in
China for high quality and reliability that has enabled Shenyang Automotive to
maintain its market-leading position in recent years. Shenyang Automotive
commenced production of the high-end Grace model in 2002 based on
semi-knockdown kits from Toyota and now produces them using domestic parts and
components. Shenyang Automotives Zhonghua sedan was introduced to the commercial
market in China in August 2002 and constituted approximately 15.3% and 33.1% of
total sales revenue in 2002 and 2003, respectively. The initial model was a
five-seat manual transmission sedan with a 4-cylinder, 2.0-liter Mitsubishi
engine. Shenyang Automotive now also produces manual transmission Zhonghua
sedans with 2.4-liter engines and automatic transmission versions with both
2.0-liter and 2.4-liter engines. In 2003, Brilliance China Automotive has increased its market share in the
Chinese sedan market with both the increased sales of Shenyang Automotives
Zhonghua sedan and the launch of the BMW 3 and 5 Series sedans produced by the
BMW joint venture. 4




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The following table sets forth certain information with respect to
Shenyang Automotives principal products as of the date of this annual report. DeluxeMinibus
    
    Deluxe
    
    
    
    
    
    Zhonghua
    
    Zhonghua(Granvia
    
    Minibus
    
    Mid-priced
    
    Sedan
    
    SedanGrace Model)
    
    (Hiace Model)
    
    Minibus
    
    Version 2.0
    
    Version 2.4Maximum numberof passengers
    
    7-8
    
    15
    
    15
    
    5
    
    5Engine type
    
    Toyota 4-cylinder2.7-liter gasolineengine
    
    Toyota 4-cylinder2.4-liter gasolineengine
    
    Mianyang Xinchenand ShenyangXinguang 4-cylinder2.2 liter gasolineengine
    
    Mitsubishi4-cylinder2.0 liter gasolineengine
    
    Mitsubishi4-cylinder2.4 liter gasolineengineHorsepower
    
    105
    
    100.6
    
    92.5
    
    122
    
    130Price Range in Rmb(1)
    
    180,000-363,000
    
    178,800-277,800
    
    73,800-159,800
    
    169,800
    
    188,800Fuel Consumption(Liters/100 km)(2)(3)
    
    10
    
    10
    
    9.8
    
    6.5 (MT)/7.6 (AT)
    
    6.8 (MT)/7.6 (AT)Maximum speed(3)
    
    158 km/hr
    
    130 km/hr
    
    130 km/hr
    
    190 km/hr (MT)/185 km/hr (AT)
    
    195 km/hr (MT)/185 km/hr (AT)Domestic component content
    
    60%
    
    80%
    
    100%
    
    70-75%
    
    70-75%Length
    
    4.7 m
    
    4.8 m
    
    4.8 m
    
    4.88 m
    
    4.88 m
   (1)
    
    Actual price depends on specific model.(2)
    
    Based on an average speed of 50-55 kilometers per hour for minibuses
and 80 kilometers per hour for sedans.(3)
    
    MT denotes manual transmission and AT denotes automatic transmission.   5




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The following table sets forth certain information with respect to the BMW
joint ventures principal products as of the date of this annual report. BMW
    
    BMWJoint Venture 3-Series Sedan
    
    Joint Venture 5-Series SedanModels
    
    Series 318 and 325
    
    Series 520, 525 and 530Maximum number of passengers
    
    5
    
    5Engine types
    
    BMW 6-cylinder1.8 liter and 2.5 litergasoline engines
    
    BMW 6-cylinder2.0 liter, 2.5 liter and 3.0 litergasoline enginesHorsepower
    
    143 - 192 bhp
    
    170 - 231 bhpPrice range in Rmb(1)
    
    398,000 - 468,000
    
    578,000 - 698,000Fuel
Consumption(Liters/100 km)(2)
    
    8.1 - 9.5
    
    9.8 - 9.9Maximum speed
    
    218 - 240 km/hr
    
    230 - 250 km/hrLength
    
    4.47 m
    
    4.84 m
  (1)
    
    Actual price depends on specific model.(2)
    
    Based on an average speed of 80 kilometers per hour.
 Deluxe minibus. The deluxe minibus has historically been Shenyang
Automotives flagship product and is among the highest quality, most
technologically advanced minibuses currently produced in China. Shenyang
Automotives predecessor began assembling deluxe minibuses under license from
Toyota in 1989. The deluxe minibus is used primarily as a passenger vehicle
and features air conditioning, and optional power steering, power windows,
automatic locks, a rear window wiper, full interior carpeting and alternative
interior configurations. Shenyang Automotives high-end products have been further improved to
incorporate more user-friendly features to meet diversified customer demands.
In the deluxe line, Shenyang Automotive has introduced a locally developed
model, based on the Toyota 441N, which is equipped with an anti-lock braking
system, improved helix rear suspension and refined interior trim. It has the
highest technical content among Shenyang Automotives product lines. On December 17, 2001, Shenyang Automotive entered into an agreement with
Toyota for the technology transfer of the fifth generation of the Toyota
minibus  the Granvia  for which production based upon semi-knockdown kits
from Toyota commenced in 2002. Shenyang Automotive began producing the Granvia
using domestic parts in the first quarter of 2004. The Granvia is marketed
under the brand name Grace when sold in China by Shenyang Automotive. The
Grace minibus exhibits several improvements over the fourth generation minibus,
including more responsive performance when carrying heavy loads, better
handling, better maneuverability, 360-degree interior moveable seats, and a
more luxurious and comfortable interior. 6




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Mid-priced minibus. The mid-priced minibus was developed by Shenyang
Automotive and was commercially introduced in the second half of 1996. Shenyang
Automotive produces two principal mid-priced minibus models, both of which are
based on the deluxe minibus and share the same styling and body of the deluxe
minibus, with the principal difference being the engine. By equipping the
majority of these models with a domestically manufactured Mianyang Xinchen or
Shenyang Xinguang engine, Shenyang Automotive is able to sell them for
significantly less than the deluxe minibus, yet still maintain function and
quality standards for these models that are only slightly lower than the deluxe
minibus. This has allowed the mid-priced minibus models to compete more
effectively in terms of price with other domestically produced products. See
 Competition below. These mid-priced models include the Aurora, a version
derived from a similar model from the deluxe line but with more local content,
and the Shuttler, which features a multi-point injection (MPI) system, improved
air conditioning and flexible seating that allows it to be used as both a
passenger and goods vehicle. In 2002, Shenyang Automotive introduced three new minibus models to the
market, including mid-priced minibuses that utilize Mitsubishi engines. In
September 2003, Shenyang Automotive launched the face-lift versions of these
minibus models. As a result, Shenyang Automotive has further consolidated its
position in the market place, while continuing to remain price competitive with
its rivals. In 2002, Shenyang Automotive invested approximately Rmb 129.0 million on a
mold for the new Grace minibus. In 2003, Shenyang Automotive invested
approximately Rmb 760.0 million (US$91.8 million) on new minibus painting
facilities, new molds for the Grace minibus, and upgrading the minibus welding
and assembling workshops. As of the end of 2003, the upgraded facilities and
workshops increased minibus capacity to 80,000 units per year (based on two
shifts) and 120,000 units per year (based on three shifts). Brilliance China
Automotive believes that its long-term interests require that Shenyang
Automotive continue to expand its production capacity. Any increase in
Shenyang Automotives future revenue will depend on its ability to continue to
expand in a similar manner. Realization of its production and sales goals is
also contingent upon other factors, including the development of new vehicle
models, the ability to continue to achieve overall cost reductions, ongoing
access to high-quality raw materials and domestic component manufacturers and
maintenance of a large well-trained labor force, an effective distribution
network and after-sales service capabilities. Zhonghua sedan.The Zhonghua sedan was designed by Italdesign and was
commercially introduced by Shenyang Automotive in August 2002 after receiving
approval from the Chinese government in May 2002. This sedan is designed to
target the mid-priced sedan market segment, including governmental
institutions, businesses and individual users in China. This sedan model was
specifically designed for the Chinese market and utilizes a high degree of
domestic component content, thereby offering cost advantages to consumers. In
2003, Shenyang Automotive spent approximately Rmb 200.0 million (US$24.2
million) on upgrading the Zhonghua production facilities and related dies and
tools. On March 27, 2001, Brilliance China Automotive entered into a three-year
technical assistance agreement with BMW under which BMW engineers provide
consulting services to help in the initial stages of production of Zhonghua
sedans at Shenyang Automotives sedan production facilities in Shenyang,
including assistance in achieving and maintaining the desired level of
production quality. This agreement expired in March 2004 and Brilliance China
Automotive and BMW are currently in discussions regarding a similar agreement
to be entered into directly between Shenyang Automotive and BMW to replace the
original agreement. 7




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The following table sets forth Brilliance China Automotives revenues by
category, for the years 2001 through 2003: 2001
    
    2002
    
    2003Revenue
    
    
    
    
    
    Revenue
    
    
    
    
    
    Revenue(Rmb million)
    
    %
    
    (Rmb million)
    
    %
    
    (Rmb million)
    
    %Minibus salesDeluxe minibus
    
    
    1,599
    
    
    
    25.7
    
    
    
    1,324
    
    
    
    18.1
    
    
    
    1,284
    
    
    
    12.7Mid-priced minibus
    
    
    4,375
    
    
    
    70.4
    
    
    
    4,600
    
    
    
    62.8
    
    
    
    4,962
    
    
    
    49.1Zhonghua
sedan(1)
    
    
    
    
    
    
    
    
    
    
    1,117
    
    
    
    15.3
    
    
    
    3,345
    
    
    
    33.1Subtotal
    
    
    5,974
    
    
    
    96.1
    
    
    
    7,042
    
    
    
    96.2
    
    
    
    9,591
    
    
    
    94.9Other
sources of income(2)
    
    
    244
    
    
    
    3.9
    
    
    
    277
    
    
    
    3.8
    
    
    
    519
    
    
    
    5.1Total
    
    
    6,218
    
    
    
    100.0
    
    
    
    7,319
    
    
    
    100.0
    
    
    
    10,110
    
    
    
    100.0
  (1)
    
    Commercial launch of the Zhonghua sedan occurred in August 2002.(2)
    
    Including sales of components. The following table sets forth the geographic breakdown of Shenyang
Automotives minibus and Zhonghua sedan sales revenue throughout China for the
years 2001 through 2003: 2001
    
    2002
    
    2003Province/
    
    Revenue
    
    
    
    
    
    Revenue
    
    
    
    
    
    RevenueMunicipality
    
    (Rmb million)
    
    %
    
    (Rmb million)
    
    %
    
    (Rmb million)
    
    %Beijing
    
    
    770
    
    
    
    12.9
    
    
    
    1,122
    
    
    
    15.9
    
    
    
    1,686
    
    
    
    17.6Guangdong
    
    
    1,855
    
    
    
    31.1
    
    
    
    1,445
    
    
    
    20.5
    
    
    
    1,502
    
    
    
    15.7Liaoning
    
    
    763
    
    
    
    12.8
    
    
    
    773
    
    
    
    11.0
    
    
    
    964
    
    
    
    10.1Shanghai
    
    
    1,072
    
    
    
    17.9
    
    
    
    1,129
    
    
    
    16.0
    
    
    
    720
    
    
    
    7.5Jiangsu
    
    
    47
    
    
    
    0.8
    
    
    
    303
    
    
    
    4.3
    
    
    
    660
    
    
    
    6.9Shandong
    
    
    222
    
    
    
    3.7
    
    
    
    238
    
    
    
    3.4
    
    
    
    465
    
    
    
    4.8Sichuan
    
    
    248
    
    
    
    4.2
    
    
    
    133
    
    
    
    1.9
    
    
    
    383
    
    
    
    4.0Tianjin
    
    
    98
    
    
    
    1.6
    
    
    
    115
    
    
    
    1.6
    
    
    
    257
    
    
    
    2.7Heilongjiang
    
    
    107
    
    
    
    1.8
    
    
    
    147
    
    
    
    2.1
    
    
    
    212
    
    
    
    2.2Henan
    
    
    87
    
    
    
    1.5
    
    
    
    80
    
    
    
    1.2
    
    
    
    168
    
    
    
    1.8Others
    
    
    705
    
    
    
    11.7
    
    
    
    1,557
    
    
    
    22.1
    
    
    
    2,574
    
    
    
    26.7Total
    
    
    5,974
    
    
    
    100.0
    
    
    
    7,042
    
    
    
    100.0
    
    
    
    9,591
    
    
    
    100.0
 8




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BMW Joint Venture On March 14, 2003, Brilliance China Automotive received formal approval
from the Chinese government with respect to the feasibility study for the
establishment of a joint venture between BMW Holding, a wholly owned subsidiary
of BMW AG, and SJAI, an indirect subsidiary of Brilliance China Automotive. On
March 27, 2003, SJAI entered into a joint venture contract with BMW Holding in
relation to the establishment of the joint venture in China. On April 28,
2003, Brilliance China Automotive, through its indirectly 90%-owned subsidiary,
SXID, entered into an agreement with the 10% shareholder of SJAI to acquire an
additional 9% interest in SJAI, thereby increasing its effective interest from
40.5% to 44.55%. On December 16, 2003, through Xing Yuan Dong, a wholly owned
subsidiary of the company, Brilliance China Automotive increased its indirect
interest in SJAI from 89.1% to 98.0% and thereby effectively further increased
its interest in the BMW joint venture to 49.0%. The registered capital and total investment cost of the joint venture is
Euro 150 million and Euro 450 million, respectively (equivalent to
approximately Rmb 1,564 million and Rmb 4,692 million, respectively). As of
December 31, 2003, Brilliance China Automotive injected Rmb 688.5 million into
the joint venture. The joint venture is to be 50%-owned by each of SJAI and BMW
Holding and has a term of 15 years starting from May 22, 2003, the date of
issuance of the joint ventures business license, which may be extended by
mutual consent of the parties to the joint venture. The business scope of the
joint venture is to produce and sell BMW-designed and branded passenger cars,
engines, parts and components and to provide after-sales services (including
repair and maintenance and spare parts) relating to its products. Profits of
the joint venture will be shared as to 50% by each of SJAI and BMW Holding, in
proportion to their respective contributions to the registered capital of the
joint venture. This joint venture contract prohibits Brilliance China
Automotive from entering into similar ventures with other automobile
manufacturers for the manufacture and sale of premium sedans in China. Brilliance China Automotive has agreed to provide a guarantee to BMW
Holding in relation to the performance by SJAI of its obligations under the
joint venture contract. A reciprocal guarantee has been provided by BMW AG to
SJAI in respect of the obligations of BMW Holding under the joint venture
contract. In addition, Brilliance China Automotive has been indemnified by
SAIAM and Shenyang JinBei Automobile Industry Company Limited with respect to
its liabilities under this guarantee to BMW Holding. On May 22, 2003, the business license for the joint venture was issued by
the Shenyang City Administration for Industry and Commerce. Commercial
production of BMW-designed and branded sedans commenced in September 2003 based
on knockdown kits supplied by BMW. The 3-Series BMW sedans were launched in
the market in October 2003 and the 5-Series were launched in November 2003. In
the first quarter of 2004, the BMW joint venture began incorporating
domestically produced components in its 3-Series sedans, but production of
these vehicles is still primarily based upon complete knockdown kits supplied
by BMW. The BMW joint ventures 5-Series sedans are still generally
manufactured using semi-knockdown kits from BMW. However, complete knockdown
kits are now being used for the manufacture of a portion of these 5-Series
sedans and these vehicles also began to include domestically produced
components in the second quarter of 2004. Production Process Minibus Production Process and Equipment  
    
    Stamping.Shenyang Automotive produces its own
semi-finished steel sheets for stamping on a roll,
drop and stack production line. Stamping is carried
out at nine production stations that utilize 38
domestic and imported presses, the largest of which
is calibrated at 3200 tons and is 9




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##### 



used to stamp roofs and side panels for the deluxe and mid-priced minibuses.
The 198 dies used for stamping and cutting body components for the deluxe
minibus and mid-priced minibus were purchased from Toyota. Substantially all
of the stamped metal vehicle components utilized in Shenyang Automotives
minibuses are produced in this stamping workshop.
    
    Welding.The welding workshop consists of ten
production stations that are each focused on a
different section of the minibus. These lines were
manufactured with Toyota technology and utilize a
combination of manual welding and automatic robotic
welding, the latter of which is utilized for the more
difficult welding points. Each welding station is
equipped with a domestically manufactured testing
machine. The annual production capacity based on two
shifts is 80,000 units and can be increased to
120,000 units based on three shifts.
    
    Painting.Shenyang Automotive currently operates a
48,600 square foot painting workshop that was set up
at the beginning of 2004 to enhance the production
capacity. The new painting workshop has three
floors, each with its own function. The new workshop
has an annual production capacity of 120,000 units,
with space reserved for expansion up to an annual
production capacity of 150,000. The new workshop uses
a painting method that combines the use of a
conveyor, automated machine and robotic machine.
Steps taken to prepare the vehicle body for painting
include de-greasing, rinsing, phosphatization and
electrophoretic coating. After each of the three
coats of paint is applied by sprayer to the minibus
body, it is dried in a heated drying chamber. The
specialized pre-painting preparation of the vehicle
allows the frame to withstand corrosion for 10 to 15
years. Also, the high standard of cleanliness in the
painting workshop and the advanced paint sprayers
used allow Shenyang Automotive to reduce
environmental pollution, provide better working
conditions for the painting workshop employees,
conserve raw materials and ensure that each minibus
receives three consistent, high-quality coats of
paint. Finally, various quality control tests are
conducted, including measurement of the luster and
thickness of the paint on each vehicle.
    
    Assembly.Shenyang Automotives final assembly
workshop is equipped with a combination single slot,
hanging and double slot conveyor. The conveyor is
570 meters long, has 86 separate workstations and is
capable of producing minibuses at the rate of one
every six minutes. Shenyang Automotive also
developed jointly with the Shenyang Automation
Research Center of the China Science Institute an
automated lifting system that is used in the assembly
of the power train, rear chassis and crank case, as
well as a computerized hydraulic machine for carrying
out the transfer from a single rail conveyor onto a
hanging line conveyor  the first of its kind to be
developed in China.
    
    Testing.Shenyang Automotive employs an advanced
comprehensive vehicle testing system to ensure that
each vehicle conforms to specifications, including
wheel alignment, exhaust emissions, steering, braking
and engine and transmission performance. All of
these final testing procedures are also supported by
a comprehensive quality control staff that monitors
each step of the production process. See  Business
Overview  Quality Control below. Zhonghua Sedan Production Process and Equipment  
    
    Stamping. At present, 104 pieces of large and medium parts of the
Zhonghua sedan are produced in the stamping (or pressing) workshop.
There are five large and medium pressing lines, among which the line
producing large (2,300 ton) parts was imported from Schuler of Germany
and is equipped with robots to handle automated production. There is
also a 6300KN uncoiling and blanking line from Schuler, which can
supply parts for up to seven production lines, as well as a 10




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##### 



100-ton die spotting press imported from Kawasaki of Japan. The other
pressing lines were purchased from a domestic equipment manufacturer.
    
    Welding. The welding workshop is required to assemble and weld 279
separate panels, 12 machined parts, 8 roll-pressed parts and 36
standard parts. This line was designed, manufactured and installed by
Kuka of Germany. The welding line consists of six zones and 223
stations, and is capable of spot-welding, carbon dioxide welding,
project welding, T-stud welding, sealing, brazing and hemming. At
present, there are 37 working robots in this workshop, which are used
to weld, seal and inspect at the most important stations on the line.
The SKID apparatus that transports components both on the ground and
overhead ADSs speed and efficiency to the welding process.
    
    Painting. Zhonghua sedans and the BMW-branded sedans share the
same painting line. All of equipment used in the painting line is
provided by Durr of Germany, and the paint supply system was imported
from Graco of the United States. Steps involved in the body painting
process include pre-treatment, E-coat, sealing, PVC, primer, top-coat
and cavity wax. The painting line is highly mechanized and automated,
with a central control system imported from Siemens. The painting line
may switch paints of different colors within 10 seconds and 15 paints
of different colors may be used in the same painting line. All of the
paints and other materials utilized in paint workshop are high quality
products sourced both from within China and abroad.
    
    Assembly and Testing. The performance of the assembly and testing
workshop is guided by an information system based on bar code
technology. The layout of the final assembly shop is designed by
Schenck Engineering of Germany and consists of the body buffer line,
main production line, test line, water proof line, finishing line and
marriage line, as well as various sub-lines and a rework area. The
assembly line utilizes a double-track conveyer system for transporting
the vehicles through each process. BMW Sedan Production Process The automotive production process employed by the BMW joint venture is
generally divided into four stages: welding, painting, assembly and testing. In
each stage, the BMW joint venture utilizes equipment primarily imported from
Germany. Each stage of the manufacturing process is also carefully monitored
both by quality control engineers and through specialized testing equipment to
ensure that the final product achieves the specified BMW Group quality
standards.  
    
    Welding.The manufacturing and welding process in the welding
workshop is performed according to the BMW Groups global standard. The
dimensional quality is checked with a state of the art CMM Machine from
Wenzel Company of Germany. The sourced welding equipment is from Edag
Company of Germany. The welding workshop contains stud welding, spot
welding, mig welding and sealing operations. The line operators have
been trained by BMW Group specialists and the process is controlled by
BMW Group specialists from Germany. The quality checks and audits are
consistent with those performed at other BMW Group plants.
    
    Painting.All of the equipment used in the painting line is
provided by Durr of Germany, and the paint supply system was imported
from Graco of the United States. Steps involved in the body painting
process are highly mechanized and automated, with a central control
system imported from Siemens. All of the paints and other materials
utilized in the paint workshop are high quality products sourced both
from within China and abroad. 11




---



##### 




    
    Assembly and Testing.The assembly workshop consists of two
assembly areas, one of which uses a conveyor system designed by the
German supplier AFT with 56 line stations in total, as well as handling
devices for heavy parts from Dalmec Company. The finishing and testing
equipment are located in the second area. A wide range of special
equipment used in BMW Group plants worldwide is used to test 100% of
the cars produced. Raw Materials and Components Raw Materials.To ensure its supply of high-quality domestic raw
materials, components and spare parts, Shenyang Automotive has established a
stable relationship with over 400 suppliers in China in 2003. Shenyang
Automotive sources the majority of its important components and raw materials
from at least two different suppliers to ensure availability and increase
competition among suppliers. In 2003, approximately 60.7% of Shenyang
Automotives components sourcing was handled through Xing Yuan Dong and Ningbo
Brilliance Ruixing, Brilliance China Automotives wholly owned subsidiaries. Steel is our principal raw material. Shenyang Automotive purchases steel
predominantly through the use of supply contracts. Since steel represented
only approximately 5% of Shenyang Automotives cost of goods sold in 2003, the
impact of rising steel prices on Shenyang Automotives overall production costs
was not significant. Furthermore, this small increase to the costs for raw
materials was more than offset by decreases in the costs of components due to
the larger economies of scale now employed in the manufacture of components
used in minibuses and an increase in the ratio of domestically produced
components used in the Zhonghua sedans. Components.Shenyang Automotive has adopted a system that regularly
evaluates its existing suppliers. These suppliers range from well-known
international suppliers to domestic suppliers with special technology and
know-how. In 2003, after conducting a comprehensive survey of its suppliers
against an array of criteria, such as quality problem feedback ratio,
production capacity, quality assurance systems and after-sales services,
Shenyang Automotive retained 405 suppliers out of 480. Implementing this
process has enabled Shenyang Automotive to build a stronger supplier network as
the foundation for future growth. The domestic component content of the deluxe minibuses is currently 80%
for the Hiace model and 60% for the Grace model. The principal components of
the deluxe minibus (Hiace model) that continue to be imported are the engine
and the rear axle, each of which is imported from Toyota. Shenyang Automotive
is currently in the process of developing deluxe minibuses that would utilize
Mitsubishi engines made by Shenyang Aerospace in order to offer a greater
variety of products to its customers. These new models would likely have a
higher domestic component ratio. Mitsubishi engines have already been
installed in a limited number of deluxe minibus (Hiace model) units. The mid-priced minibus uses 100% domestic parts and the domestic component
content of the Zhonghua sedan is over 70%. Brilliance China Automotive
calculates domestic component content by looking through larger components,
such as engines, produced by domestic Chinese entities to determine the
percentage of such components own components that were manufactured outside
China. Because certain components are imported from Toyota and other suppliers in
Japan and Europe, the availability of foreign exchange, exchange rates, import
restrictions and the level of import duties may affect the availability of
certain components and Shenyang Automotives costs of
production. See Item
5  Operating and Financial Review and Prospects  Liquidity and Capital
Resources. Shenyang Automotive is required to pay import duties on imported
automobile components. Shenyang Automotive was subject to an average tariff
rate of 13.0% to 15.0% on imported components 12




---



##### 



used in its minibuses and Zhonghua sedans in 2003. During 2003, imported
components comprised approximately 24% of the total costs of all deluxe
minibuses. In addition, imported components comprised 26% of the total costs
of the Zhonghua sedan during 2003. Changes in foreign currency exchange rates
also affect the cost of foreign-manufactured components imported by Chinas
domestic manufacturers to make larger components, such as engines, which we
purchase domestically. The total aggregate import tariffs paid by Shenyang
Automotive for 2003 were approximately Rmb 104.6 million (US$12.6 million).
However, as a result of Chinas admission to the WTO, import tariffs on motor
vehicle components decreased to between 4.8% and 25% effective January 1, 2003.
A decrease in import tariffs will result in a decrease in the percentage of
the total cost of deluxe minibuses and sedans that imported components
comprise. Brilliance China Automotive intends to continue its efforts to increase
domestic component content for both deluxe minibuses and sedans, while at the
same time emphasizing quality. See Item 5  Operating and Financial Review and
Prospects. Other Significant Subsidiaries, Jointly Controlled Entities and Associated Companies Brilliance China Automotive believes that the acquisition of interests in
strategic components suppliers has and will continue to broaden its revenue
base, increase the reliability of the supply of certain core components of
Shenyang Automotives and the BMW joint ventures minibuses and sedans, enhance
their ability to monitor component quality and facilitate greater coordination
among the management and engineering personnel and their respective principal
suppliers. Mianyang Xinchen Mianyang Xinchen, directly and indirectly through Xing Yuan Dong (as
described below), accounted for 8.3% of Shenyang Automotives purchases of
parts and components in 2003. Mianyang Xinchens principal product is the 2.2
liter 491Q gasoline engine. In 2000, Mianyang Xinchen also began producing the
491QE electronic fuel injection engine on a mass production basis to satisfy
the markets demand for products that can meet new higher emission standards.
In 2001, Mianyang Xinchen developed three additional passenger vehicle gasoline
engines. As a result, Shenyang Automotive has access to engines suited to a
full range of light-duty passenger vehicles. Mianyang Xinchen had annual sales
of Rmb 819.8 million (US$99.0 million) in 2003. Shenyang Automotive, which
installs Mianyang Xinchens 491Q engine in most of its mid-priced minibuses,
accounted for 58.1% of Mianyang Xinchens sales in 2003. Mianyang Xinchens
overall annual sales of gasoline engines in 2003 increased by 24.2% from 2002.
In 2003, the after-sales repair ratio for Mianyang Xinchens products decreased
to 6.5% from 6.7% in 2002. Mianyang Xinchens current annual production
capacity is 100,000 to 120,000 gasoline engines (depending on number of
shifts). In March 2004, the technology center of Mianyang Xinchen was designated by
Chinese governmental authorities as a State-class enterprise technology center,
becoming only the second State-class enterprise technology center in China
automotive gasoline engine industry. Ningbo Yuming Ningbo Yuming, directly and indirectly through Xing Yuan Dong and Ningbo
Brilliance Ruixing (as described below), accounted for 4.8% of Shenyang
Automotives purchases of parts and components in 2003. Ningbo Yumings
principal products are automobile window molding and stripping, as well as a
front independent suspension system (including high performance front axle) for
use in light passenger vehicles. Ningbo Yuming had annual sales of Rmb 277.7
million (US$33.5 million) in 2003. Ningbo Yuming intends to further develop
front axles for use in different types of light goods vehicles to enlarge 13




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##### 



its market share in the safety components market. Ningbo Yuming received
ISO-9002 accreditation in December 1999. Shenyang Automotive, which uses
Ningbo Yumings products in all of its deluxe minibuses, mid-priced minibuses
and Zhonghua sedans, accounted for approximately 97.3% of Ningbo Yumings sales
in 2003. Shenyang Automotive also granted Ningbo Yuming the status of Class A
Supplier in 1999, which it continues to hold. Shenyang Xinguang Shenyang Xinguang is principally engaged in the manufacture and sale of
gasoline engines for use in passenger vehicles and light duty trucks. In 2003,
engine purchases by Shenyang Automotive for use in mid-priced minibuses
accounted for 54.3% of Shenyang Xinguangs total sales, which amounted to Rmb
515.1 million (US$62.2 million). Shenyang Xinguang currently produces 491Q
engines and has a production capacity of 50,000 engines per year. It
manufactured and sold 51,092 and approximately 50,300 491Q engines,
respectively, in 2003. Shenyang Xinguang intends to further develop upgraded versions of the 491Q
engine in 2004. These new 16-valve engines will have greater power and will be
designed to satisfy European III emission standards. They will be suitable for
use in JinBei minibuses (models SY6480A) and Zhonghua sedans. Shenyang
Xinguang plans to produce this new engine by using part of its existing 491Q
facilities, together with a new production line. Planned capacity for this new
engine is 50,000 units per year, based on two daily shifts. Xing Yuan Dong, Ningbo Brilliance Ruixing and Mianyang Brilliance Ruian Xing Yuan Dong assists Shenyang Automotive in obtaining and developing a
reliable supply of domestically produced parts and components. Xing Yuan Dong
also facilitates development of locally produced automotive parts and
components and acts to improve the quality of these components. When a
customized component is needed, Xing Yuan Dong provides potential suppliers
with designs and specifications for the customized parts and components
required by Shenyang Automotive. These potential suppliers liaise with Xing
Yuan Dong and discuss details of production. Xing Yuan Dong then selects
appropriate suppliers and offers technical assistance and cost evaluations.
Xing Yuan Dong continuously strives to reduce the number of Shenyang
Automotives suppliers, lower costs, increase the efficiency and commitment of
the remaining suppliers, streamline the component purchasing process and ensure
a steady supply of high quality components. In 2001, Xing Yuan Dong, in order
to maintain its preferential tax treatment from the Chinese government, also
began manufacturing automotive components for Shenyang Automotive. In 2003,
100% of Xing Yuan Dongs sales were to Shenyang Automotive. Ningbo Brilliance Ruixing was established on June 9, 2000 as a wholly
owned subsidiary of Brilliance China Automotive to facilitate the trading and
development of automotive components between Ningbo Yuming and Shenyang
Automotive. In 2003, 100% of Ningbo Brilliance Ruixings sales were made to
Shenyang Automotive and 96.3% of Ningbo Brilliance Ruixings purchases were
from Ningbo Yuming. Beginning in 2001, Ningbo Brilliance Ruixing also began
manufacturing automotive components for Shenyang Automotive. Mianyang Brilliance Ruian was established on July 3, 2000 as a wholly
owned subsidiary of Brilliance China Automotive to facilitate the trading and
development of automotive components for Mianyang Xinchen. In 2003, 95.7% of
Mianyang Brilliance Ruians sales were made to Mianyang Xinchen. In 2001,
Mianyang Brilliance Ruian also began manufacturing automotive components for
Shenyang Automotive. 14




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##### 



Shenyang Aerospace Shenyang Aerospace was formed for the purpose of manufacturing 2.0-liter,
122 horsepower and 2.4-liter, 130 horsepower Mitsubishi gasoline engines.
Shenyang Aerospace commenced trial operation in March 1999. Shenyang
Automotive uses these engines in its deluxe minibuses and in the Zhonghua
sedans. In addition, Shenyang Aerospaces engines are also suitable for sale
domestically to other passenger vehicle producers. Mitsubishi Motors
Corporation, Mitsubishi Corporation, China Aerospace Automotive Industry Group
Co., MCIC Holdings Sdn. Bhd. and Shenyang Jianhua Motors Engine Co. Ltd., or
Shenyang Jianhua, own equity interests of 25.0%, 9.3%, 30.0%, 14.7% and 21.0%,
respectively, in Shenyang Aerospace. With a 60.8% effective interest in
Shenyang Jianhua, Brilliance China Automotive currently has an effective
interest in Shenyang Aerospace of 12.8%. Upon completion of the acquisition of
additional shares of JinBei, Brilliance China Automotives effective interest
in Shenyang Jianhua will increase to 76.4% and consequently Brilliance China
Automotives effective interest in Shenyang Aerospace will increase to
approximately 16.0%. Dongxing Automotive and Xingchen Automotive Seats In December 2001, Brilliance China Automotive entered into an agreement
with Brilliance Holdings Limited for the acquisition of the entire issued share
capital of Key Choices Group Limited at a consideration of approximately Rmb
278.0 million. Key Choices is an investment holding company and its principal
assets are the 100% equity interest in the registered capital of Dongxing
Automotive and a 90% equity interest in the registered capital of Shenyang
Xingchen Automotive Seats Co., Ltd., or Xingchen Automotive Seats. Dongxing
Automotive is a foreign-invested enterprise established in China whose
principal products are automotive components for use in passenger vehicles.
Xingchen Automotive Seats is a Sino-foreign equity joint venture established in
China in December 2001 that formerly was principally engaged in the
manufacturing of automotive seats. However, Xinchen Automotive Seats ceased
its operations in the second half of 2002. Sales and Marketing The following tables set forth by vehicle model for the years 2001 through
2003 the number of Shenyang Automotive and BMW joint venture minibuses and
sedans sold and the percentage of unit sales represented by each model: Shenyang Automotive 2001
    
    2002
    
    2003Units Sold
    
    %
    
    Units Sold
    
    %
    
    Units Sold
    
    %Deluxe minibus
    
    
    9,653
    
    
    
    15.3
    
    
    
    9,017
    
    
    
    12.2
    
    
    
    9,004
    
    
    
    8.6Mid-priced minibus
    
    
    53,356
    
    
    
    84.7
    
    
    
    56,121
    
    
    
    75.9
    
    
    
    65,614
    
    
    
    62.7Zhonghua sedan(1)
    
    
    
    
    
    
    
    
    
    
    8,816
    
    
    
    11.9
    
    
    
    25,600
    
    
    
    24.5Total
    
    
    63,009
    
    
    
    100.0
    
    
    
    73,954
    
    
    
    100.0
    
    
    
    100,218
    
    
    
    95.8
  (1)
    
    Commercial launch of the Zhonghua sedan occurred in August 2002. 15




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##### 



BMW Joint Venture 2001
    
    2002
    
    2003Units Sold
    
    %
    
    Units Sold
    
    %
    
    Units Sold
    
    %BMW
sedans(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,359
    
    
    
    4.2
  (2)
    
    Commercial launch of the BMW sedans was in the fourth quarter of 2003. Shenyang Automotives marketing efforts are supervised by its General
Manager and are conducted primarily through a regionalized sales program under
which Shenyang Automotive has divided China into six major sales regions and
three sales belts, each headed by an experienced senior executive. These
regions are further subdivided into 30 provincial sales regions for minibuses
and 26 provincial sales regions for sedans. Each of these sales regions
corresponds to a separate province in China. These units are responsible for
meeting defined sales targets, with the executives compensation linked to
performance. In addition, Shenyang Automotive implements a commission
compensation package for its sales personnel and rewards with bonuses its
non-sales personnel who develop customer leads that result in minibus sales.
The retail prices and commission scales are both nationally unified by Shenyang
Automotive, thereby preventing cross-regional sales and counter-productive
price wars. Shenyang Automotives minibuses and Zhonghua sedans are marketed
through a sales network of over 250 exclusive and over 600 non-exclusive
minibus distributors and over 110 exclusive sedan distributors nationwide, as
well as through annual automobile industry trade shows and at special sales
shows sponsored by JinBei and Shenyang Automotive. All of Shenyang
Automotives 2003 unit sales of minibuses and sedans were made to its
distributors. Shenyang Automotives sales growth in China has been supported by a
substantial network of over 250 exclusive minibus distributors and over 110
sedan distributors, as well as over 330 after-sales service centers for
minibuses and over 150 for sedans. Shenyang Automotive also continued to
implement its 4S sales center system, combining sales, service, spare parts and
surveys in one location. As of December 31, 2003, Shenyang Automotive had over
80 and over 70 dealership outlets for minibuses and sedans, respectively, which
had achieved the 4S dealership standard. Most of Shenyang Automotives minibus and sedan sales were made on a cash
basis in 2002. In addition, in order to incentivize customers and facilitate
sales, Shenyang Automotive also accepts three-month to six-month bank-endorsed
notes as payment for its minibuses and sedans. Shenyang Automotive has focused intensively on standardizing the sales and
marketing methods adopted by its over 210 first tier dealers (including over 70
authorized dealership outlets), over 110 second tier dealers and hundreds of
retailers. Shenyang Automotive has also revoked sales authorization from those
dealers that have not continued to follow these guidelines. Shenyang Automotive has 23 regional distribution centers in order to
shorten delivery lead-times. Also, by utilizing transportation methods such as
trucking, rail and shipping, Shenyang Automotive ensures that most vehicles are
not driven until they reach the end users. In 2003, all finished products were
delivered to customers with zero mileage. 16




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##### 



The following table sets forth the geographic breakdown of Shenyang
Automotives minibus and sedan unit sales throughout China for the years 2001
through 2003: 2001
    
    2002
    
    2003Minibuses
    
    Minibuses
    
    Sedans
    
    Minibuses
    
    SedansProvince/
    Municipality
    
    Units
    
    %
    
    Units
    
    %
    
    Units
    
    %
    
    Units
    
    %
    
    Units
    
    %Guangdong
    
    
    18,595
    
    
    
    29.5
    
    
    
    14,067
    
    
    
    21.6
    
    
    
    1,302
    
    
    
    14.8
    
    
    
    13,000
    
    
    
    17.4
    
    
    
    3,158
    
    
    
    12.4Beijing
    
    
    8,257
    
    
    
    13.1
    
    
    
    10,994
    
    
    
    16.9
    
    
    
    955
    
    
    
    10.8
    
    
    
    15,679
    
    
    
    21.0
    
    
    
    2,876
    
    
    
    11.2Liaoning
    
    
    7,357
    
    
    
    11.7
    
    
    
    6,713
    
    
    
    10.3
    
    
    
    1,281
    
    
    
    14.5
    
    
    
    7,780
    
    
    
    10.4
    
    
    
    2,408
    
    
    
    9.4Shanghai
    
    
    11,527
    
    
    
    18.3
    
    
    
    11,030
    
    
    
    16.9
    
    
    
    987
    
    
    
    11.2
    
    
    
    6,571
    
    
    
    8.8
    
    
    
    1,301
    
    
    
    5.1Jiangsu
    
    
    535
    
    
    
    0.8
    
    
    
    2,113
    
    
    
    3.2
    
    
    
    872
    
    
    
    9.9
    
    
    
    5,415
    
    
    
    7.3
    
    
    
    1,550
    
    
    
    6.1Shandong
    
    
    2,055
    
    
    
    3.3
    
    
    
    2,063
    
    
    
    3.2
    
    
    
    395
    
    
    
    4.5
    
    
    
    2,221
    
    
    
    3.0
    
    
    
    2,114
    
    
    
    8.3Sichuan
    
    
    1,013
    
    
    
    1.6
    
    
    
    851
    
    
    
    1.3
    
    
    
    437
    
    
    
    5.0
    
    
    
    1,945
    
    
    
    2.6
    
    
    
    1,702
    
    
    
    6.6Tianjin
    
    
    979
    
    
    
    1.6
    
    
    
    1,147
    
    
    
    1.8
    
    
    
    84
    
    
    
    0.9
    
    
    
    1,683
    
    
    
    2.3
    
    
    
    870
    
    
    
    3.4Heilongjiang
    
    
    938
    
    
    
    1.5
    
    
    
    1,416
    
    
    
    2.2
    
    
    
    146
    
    
    
    1.7
    
    
    
    1,542
    
    
    
    2.1
    
    
    
    614
    
    
    
    2.4Henan
    
    
    828
    
    
    
    1.3
    
    
    
    733
    
    
    
    1.1
    
    
    
    108
    
    
    
    1.2
    
    
    
    1,013
    
    
    
    1.4
    
    
    
    614
    
    
    
    2.4Others
    
    
    10,925
    
    
    
    17.3
    
    
    
    14,011
    
    
    
    21.5
    
    
    
    2,249
    
    
    
    25.5
    
    
    
    17,769
    
    
    
    23.7
    
    
    
    8,393
    
    
    
    32.7Total
    
    
    63,009
    
    
    
    100.0
    
    
    
    65,138
    
    
    
    100.0
    
    
    
    8,816
    
    
    
    100.0
    
    
    
    74,618
    
    
    
    100.0
    
    
    
    25,600
    
    
    
    100.0
 Generally, Shenyang Automotives sales are the highest in the second and
fourth quarters of the year. In 2003, Shenyang Automotive recorded its highest
levels of sales in the second and third quarters. The Chinese government continues to encourage the development of the
relatively underdeveloped, resource-rich western provinces of China and
significant government resources have been allocated in the past to develop the
infrastructure of the western provinces. Brilliance China Automotive believes
the governments policy regarding western China will be conducive to the
development of the local automotive markets. Although Brilliance China
Automotives largest market today remains in the eastern coastal provinces,
Brilliance China Automotive believes that the market in the western provinces
of China represent substantial upward growth potential in the future.
Brilliance China Automotive will continue to expand its dealership system in
that region to tap into this potential growth. Approximately 20% of consolidated revenues in 2003 were generated from
Shanghai Shenhua Holdings Co., Ltd. (formerly known as Shanghai Brilliance
Group Co., Ltd. and Shanghai Shenhua Industrial Co., Ltd.) or Shanghai Shenhua.
Shanghai Shenhua is an affiliate of Brilliance China Automotive that serves as
the principal distributor of Shenyang Automotives products. Shanghai Shenhua
operates under substantially the same commercial terms and arrangements with
Shenyang Automotive as its other third party distribution agents. However, in
southern China, where it sells solely 17




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##### 



to distributors on an exclusive basis, Shanghai Shenhua receives
additional compensation for operating after-sales service centers, which was a
1% commission on sales until January 2003. Since January 2003, this
compensation has been paid in the form of a commission of Rmb 100 to Rmb 150
per vehicle sold. Shenyang Automotive uses a computerized sales monitoring system to
identify customer demographics with better accuracy, determine which products
and options are most in demand and improve inventory control. As Shenyang
Automotive brings more product options to market, Brilliance China Automotive
believes that this computer system will provide Shenyang Automotive with the
ability to track customer preferences in various regions and adjust its
production and distribution efforts accordingly. In 2003, Shenyang Automotive spent approximately Rmb 200.9 million
(US$24.3 million) on overall advertising, consisting primarily of Internet,
television and print advertising. Competition The Chinese minibus manufacturing industry is highly fragmented and
competitive. According to the China Automotive Technology & Research Center,
in 2003, approximately 53 manufacturers sold an aggregate of approximately
440,240 minibuses, with approximately 223,000 of such minibuses sold by five
manufacturers, each of which has the capacity to produce in excess of 30,000
minibuses per year and produced more than 30,000 minibuses in 2003.
Significant competitive factors in the industry include price, quality,
reliability and customer service. Brilliance China Automotive believes that
Shenyang Automotive competes favorably in all of these respects, and
particularly in terms of quality, although Shenyang Automotive has experienced
competition in recent years from other manufacturers producing lower priced,
mid-range minibuses. The Chinese sedan manufacturing industry is also very competitive and
fragmented. The top five brands account for 59.6% of the overall market based
on unit sales volume. The market shares of the three leading manufacturers
have been decreasing over the past several years. New models continue to be
introduced on an increasingly rapid basis as the number of new entrants into
the market has also increased. Unit sales of domestically produced sedans
totaled 1,971,601 units in 2003, making sedans the largest segment of the
Chinese automotive market, accounting for 44.9% of the overall market. It was
also the fastest growing segment, as unit sales of sedans increased by 75.3% in
2003 compared to 2002. Sedans are also widely expected to continue to be the
fastest growing segment of the Chinese automobile market over the next few
years. However, while vehicle ownership is expected to continue to increase
steadily in China as a result of increasing individual disposable income, there
is also expected to be increasing pricing pressure as tariff rates decline and
competition continues to grow from domestic, foreign and foreign-invested sedan
manufacturers. Historically, Chinese motor vehicle producers have been exposed to little
competition from non-Chinese enterprises, partly as a result of import
restrictions on foreign-made components and motor vehicles. However, as a
result of Chinas admission to the WTO, which regulates trading and tariffs
among its signatory states, in November 2001, China committed to reducing its
import restrictions on motor vehicles and motor vehicle components. In
addition, China will be required to conform its import tariffs to the uniform
tariffs under the WTO. Effective January 1, 2002, China has reduced its import
tariffs on motor vehicles and automotive components from between 80% to 100%
and between 18% to 40%, respectively, to between 43.8% to 50.7% and between
14.0% to 31.4%, respectively. This range was lowered further to between 4.8%
and 25% for automotive components effective January 1, 2003. In addition,
tariffs on vehicles with nine seats or less and engine sizes of three liters or
below fell from 43.9% in 2002 to 38.2% for 2003, and to 34.2% for 2004, while
tariffs on vehicles with more than nine seats and engines of more than three
liters decreased from 50.7% in 2002 to 43.0% for 2003, and to 18




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##### 



37.6% for 2004. All of these tariffs levels are scheduled to be further
reduced by 2006. Such reductions in tariffs and import restrictions could
potentially increase the competition Brilliance China Automotive will face from
foreign manufacturers. Listed below are Shenyang Automotives current main competitors in the
Chinese minibus and sedan market. The data listed for each is based on
information published by the Chinese government regarding the Chinese
automotive industry: Minibus  
    
    Southeast Motors.Taiwan China Motors and Fujian Provincial
Automobile Industry Company established a 50-50 joint venture
company, Southeast Motors in November 1995. Southeast Motors has
launched over thirty different models of light passenger vehicles
under the Delica and Freeca brand names. Southeast Motors has an
annual production capacity of 60,000 light passenger vehicles. Its
sales volume in 2003 was 49,978 vehicles, which represents a 6.2%
increase from 2002. The Delica series includes seven-, eight- and
eleven-seat ordinary, luxury and super luxury models. The Freeca
series includes eight-seat standard, luxury and super luxury models.
    
    Nanjing Iveco.In 1995, Italys Fiat Auto Company and Yuejin Group
established Nanjing Iveco Automotive Company, Ltd., a 50-50 equity
joint venture, for the manufacture of 33 models of five-ton
passenger, goods and off-road vehicles in the Iveco S series. Models
currently in production include the A30, A40 and A49 passenger
vehicles, as well as a separate series of goods vehicles. Current
annual production capacity is 60,000 vehicles and 75,000 engines. In
2003, Nanjing Iveco sold 14,666 vehicles, which was third to
Brilliance China Automotive and Southeast Motors in Chinas minibus
market.
    
    Jiangling Motors.Jiangling Motors Corp. of Jiangxi Province, after
two years of cooperation with Ford Motor Company (which owns a
minority interest in Jiangling Motors), began producing the China
Transit, a Ford brand minibus, in December 1997. At present, the
vehicle is available in 15-seat, 12-seat and 9-seat versions. In
2003, Jiangling Motors sold a total of 11,510 vehicles. Production
capacity for 2003 was approximately 20,000 units per shift. Zhonghua Sedan Brilliance China Automotive considers the following companies to be its
main competitors in the market for sedans priced between Rmb 130,000 and Rmb
250,000, which includes the Zhonghua sedan:  
    
    First Auto Works Group of China.First Auto Works is one of the
largest automotive companies in China. First Auto Works Hongqi sedan
was launched in 2001 and is considered one of the Chinese governments
showcase China-made sedans. Its latest model is known as the Hongqi
Mingzhi, was launched in 2004, and has a 1.8-liter engine with four
doors. It is priced at approximately Rmb 149,800, similar to the
Zhonghua sedan. First Auto Works sold 18,978 and 17,265 Honqi Mingzhi
sedans in 2002 and 2003, respectively.
    
    Shanghai Volkswagen Automotive. Shanghai Volkswagen Automotive was
one of the original state-designed automobile manufacturers in China.
It is currently 40% owned by Volkswagen AG of Germany and 25% owned by
Shanghai Automotive Industry Corp. It still holds a dominant share of
the Chinese sedan market and competes with the Zhonghua sedan through
the Santana 2000 and Santana 3000 sedans. The Santana 2000 had a
1.8-liter engine and sells for approximately Rmb 145,000 to Rmb
174,000. In 2002 and 2003, Shanghai Volkswagen 19




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##### 



Automotive sold 95,117 and 92,892 units of Santana 2000 sedans, respectively.
In March 2004, Shanghai Volkswagen Automotive launched the new Santana 3000,
which replaced the Santana 2000.  
    
    Beijing Hyundai. Beijing Hyundai was established in
2002 as a 50-50 joint venture between Beijing Auto
Investment and Hyundai Motor Co. of South Korea. It
currently produces and sells the Sonata 2.0-liter and
Sonata 2.7-liter, and the newly-introduced Elantra
1.6-liter and 1.8-liter models. The Sonata 2.0-liter
is priced between Rmb 172,800 and Rmb 188,000 for the
manual versions and between Rmb 182,800 and Rmb
212,800 for the automatic versions. The Elantra 1.8
liter sedan sells for approximately Rmb 156,000 and
Rmb 166,800 for the manual and automatic versions,
respectively. Beijing Hyundai had total sales of
52,128 units of these models in 2003. The 2.0-liter
Sonata sells for approximately Rmb 200,000 per unit. BMW Sedans Brilliance China Automotive currently does not consider there to be any
direct competitor to its BMW sedans in the domestic market for high-end luxury
cars produced in China in terms of quality, craftsmanship, price, performance
and technology but does consider Audi sedans, which are produced by FAW
Volkswagen, an indirect competitor in China. FAW Volkswagon is 10% owned by
Audi AG, 30% by Volkswagen AG and 60% by First Auto Works of China. FAW
Volkswagon produces and sells the Audi A4 and A6 sedans and the Volkswagen
Jetta and Bora sedans in China. FAW Volkswagons Audi sedans have a dominant
share of Chinas premium sedan market. In 2002 and 2003, FAW Volkswagon sold
34,962 and 53,108 units of Audi A6 sedans, respectively. The Audi A4 sedan was
formally launched in Chinas market in 2003 and had a total sales volume of
8,173 in 2003. In May 2003, DaimlerChrysler AG signed a project proposal with Beijing
Automotive Industry Holding Company Ltd., or BAIC, to manufacture Mercedes-Benz
C-Class and E-Class sedans in China. According to announcements by
DaimlerChrysler, the vehicles will be produced in a new facility in Beijing
with an initial production capacity of 25,000 units per year. Brilliance China Automotive does not consider current foreign importers of
luxury cars with similar quality, craftsmanship, performance and technology
(such as the Mercedes C-Class and E-Class sedans) to be direct competitors for
the BMW sedans as they are subject to import tariffs and restrictions and
cannot be priced competitively with the BMW joint ventures locally produced
BMW sedans. Governmental Regulation The automobile industry in China is controlled at the central government
level by the National Development and Reform Commission (formerly the State
Development and Planning Commission), or NDRC, and the Ministry of Commerce
(which subsumed some of the duties of the former Ministry of Foreign Trade and
Economic Cooperation). These entities were created as a result of the
governmental restructuring that commenced in March 2003. The NDRC generally
oversees and regulates the automobile industry in China and any new product or
new automobile production facility must obtain the prior approval of this body
before entering the market. Similarly, approval from the Ministry of Commerce
must be obtained prior to any changes to existing products or the expansion of
existing facilities. Both of these entities must also approve any Sino-foreign
joint venture for the production of automobiles. On June 2, 2004, the NDRC issued a new automobile policy to replace the
one that had been in place since 1994. Two of the policys stated goals are
industry consolidation and enhancement of 20




---



##### 



corporate capacity for research and development. To further these goals,
the new policy sets minimum levels of investment for new plants and research
and development. Engine plant investments are now required to be over Rmb 1.5
billion (US$181 million) and new automobile manufacturing projects must be over
Rmb 2.0 billion (US$242 million). New automobile projects also must include a
product research and development investment of at least Rmb 500 million
(US$60.4 million). The new policy will treat semi-knocked down imports as complete vehicle
imports and therefore impose vehicle import tariffs instead of component
tariffs on them. Current vehicle import tariff levels are between 34.2% and
37.6% (scheduled to fall to 25% by July 2006) whereas current component tariff
levels are between 15% and 18% (scheduled to fall to 10% by July 2006). In contrast to the old regulations, foreign investors in the automobile
and motorcycle market will now be allowed to control more than 50% of a joint
venture with Chinese partners if the joint venture is located in an export
processing zone and plans to sell its products in overseas markets. The new
policy will also allow foreign investors to open more than two joint venture
plants in China to produce the same categories of vehicles if they do so with
their existing Chinese partners through acquisitions of other companies in
China. The new policy acknowledges the success of Chinas automobile industry and
seeks to encourage this pillar industry to foster further growth,
particularly of domestically produced and branded products and research and
development, through consolidation of smaller, less-efficient manufacturers and
increased foreign and domestic investment. In addition, the policy aims to
centralize or reorganize certain automobile-related sectors, such as consumer
loan services, to reduce overhead and administrative burdens on the industry
and allowing industry participants to focus on their core businesses. By encouraging industry consolidation and establishing clearer guidelines
for foreign investment, the policy, in the opinion of Brilliance China
Automotive, encourages existing players in the industry to grow and provides
incentives for targeted investment from both domestic and foreign sources.
However, the ultimate impact of the new policy on Brilliance China Automotive
and other industry participants remains uncertain and subject to more detailed
guidance and implementing regulations that are expected to be promulgated by
the NDRC in the future. Quality Control As a result of technical and managerial training from Toyota and technical
assistance from BMW, Shenyang Automotive has adopted a highly regimented
production quality management system for its minibuses and sedans. This
two-fold system concentrates both on the quality of the raw materials and other
production inputs and on the production process itself. In the production
process, the focal point of quality control is the production line worker, who
undergoes extensive training and testing to ensure that he or she performs the
assigned task to the highest quality standards and is qualified and able to
determine on his or her own whether or not the product meets the required
specifications. In addition, Shenyang Automotives specialized quality control
engineers are present at each step of the production process, with 33 separate
quality inspection points. In addition, Shenyang Automotive has established a quality improvement
unit to supervise and monitor after-sales service centers in major regional
sales bases, such as Guangzhou, Shanghai and Beijing, which also serve as
channels for information feedback on product quality. Designated personnel are
assigned to follow-up on finding remedies for recurring quality issues in a
timely manner. Shenyang Automotive was granted the internationally recognized ISO-9001-94
quality system certificate in October 1995, making it the first major
automobile manufacturer in China to be awarded 21




---



##### 



such certificate. Shenyang Automotive has successfully obtained
recertification in each subsequent year by demonstrating a continued commitment
to upholding among the highest quality standards in Chinas automobile
industry. To date, over 120 of Shenyang Automotives over 260 component
suppliers achieved QS-9000 quality system certification and 260 are accredited
by ISO-9000. After-Sales Service Shenyang Automotives minibuses are sold with a 24-month or 50,000
kilometers (2002 and 2001: 18-month or 30,000 kilometers) first-to-occur
limited warranty. The Zhonghua sedans are sold with a 36-month or 60,000
kilometers (2002: 24-month or 40,000 kilometers) first-to-occur limited
warranty. In addition to these basic limited warranties, in 2003 Shenyang
Automotive also offered customers a broader warranty for its Zhonghua sedans.
During the warranty period, Shenyang Automotive pays service stations for parts
and labor covered by the warranty; thereafter, customers must pay for all parts
and labor. In 2003, total warranty costs for minibuses and sedans sold during
the year were approximately Rmb 33.3 million (US$4.0 million) and Rmb 54.1
million (US$6.5 million), respectively, or an average of Rmb 446 (US$54) per
minibus sold and Rmb 2,114 (US$255) per Zhonghua sedan sold. There are over 330 and over 150 service centers for Shenyang Automotive
minibuses and sedans, respectively, throughout China, with centers clustered in
areas that match distribution patterns of the vehicles. Such centers have been
granted authority by Shenyang Automotive to service its minibuses and sedans,
including the provision of repair services and the sale of spare parts. This
extensive service network has enabled Shenyang Automotive to adopt its current
policy of resolving routine customer complaints in all provincial capitals and
major cities within 24 hours and major problems within three days. To improve customer service, Shenyang Automotive continually reevaluates
its existing distributors based on certain criteria, including financial
soundness, customer service capabilities and customer complaint record.
Shenyang Automotive has also implemented a more advanced 4S sales center
system, which features sales, service, spare parts and survey in one location
at the point of sale. As of the end of 2003, Shenyang Automotive had over 80
and over 70 4S dealership outlets for its minibuses and sedans, respectively. The BMW joint venture currently has 23 distributors, out of which 18 are
4S dealership outlets, mainly located in first tier cities in China. The number
of distributors is expected to increase to over 40 by the end of 2004. Like
Shenyang Automotive, the BMW joint venture implemented the more advanced 4S
sales center system. 22




---



##### 



Environmental Matters The Chinese government has set vehicle safety, exhaust and performance
standards with which Shenyang Automotive and the BMW joint venture must comply.
Brilliance China Automotive believes that Shenyang Automotives and the BMW
joint ventures minibuses and sedans currently meet the standards imposed by
the government. Their respective facilities are subject to government
pollution regulations enforced by the Shenyang municipal government. If
operations are found to be in violation, the government will allow a period of
time to remedy the problem. If it should fail to do so, the government can
force a shut-down of Shenyang Automotives or the BMW joint ventures
operations until such time as the violator complies with the regulations. To
date, neither Shenyang Automotive nor the BMW joint venture has been cited as
violating a government pollution regulation. On January 1, 2000, Beijing, Tianjin and Yunnan Province put into effect
emission standards that are significantly stricter than the then prevailing
gasoline vehicle emission standards. Since then, these emission standards have
been adopted nationwide. Shenyang Automotives electronic fuel injection
minibus, introduced in 1999, passed the emission standards tests at the China
National Automobile Testing Center in Tianjin in October 1999. This engine not
only produces cleaner emissions, but also achieved up to an 8% increase in fuel
economy and a 3% increase in horsepower. In early 2001, Shenyang Automotive
began to install multiple electronic fuel injection engines, which are
currently used in all of Shenyang Automotives mid-priced minibuses. With the
installation of this new engine in the mid-priced minibus, currently all of
Shenyang Automotives minibuses meet European II emission standards. All
Zhonghua and BMW sedans also meet these emission standards. In 2004, the
Chinese government began to encourage its vehicle manufacturers to meet the
European III standards. All the vehicles of both Shenyang Automotive and the
BMW joint venture are expected to meet the European III emission standards in
the second half of 2004. Insurance Shenyang Automotive and the BMW joint venture currently hold insurance
policies that Brilliance China Automotive believes are customary and standard
for companies of comparable size in comparable industries in China. Shenyang
Automotive does not carry product liability insurance, and Brilliance China
Automotive believes it is customary and standard in the Chinese automobile
industry for manufacturers not to carry product liability insurance. The BMW
joint venture has elected to purchase product liability insurance, in order to
conform with BMWs worldwide standards. 23




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##### 



Organizational Structure The following chart sets forth the percentage ownership of significant
subsidiaries, associated companies and jointly controlled entities of
Brilliance China Automotive as of the date of this annual report. (ORGANIZATIONAL STRUCTURE CHART) 24




---



##### 



The following table lists information concerning the subsidiaries, jointly
controlled entities and associated companies of Brilliance China Automotive as
of December 31, 2003: EffectiveInterest held byJurisdiction of
    
    Brilliance ChinaSubsidiaries
    
    Incorporation
    
    AutomotiveShenyang Brilliance JinBei Automobile Co., Ltd.
    
    China
    
    
    51
    %Ningbo Yuming Machinery Industrial Co., Ltd.
    
    China
    
    
    51
    %Shenyang XingYuanDong Automobile Component Co., Ltd.
    
    China
    
    
    100
    %Shenyang Jianhua Motors Engine Co., Ltd.
    
    China
    
    
    60.8
    %Ningbo Brilliance Ruixing Auto Components Co., Ltd.
    
    China
    
    
    100
    %Mianyang Brilliance Ruian Automotive Components Co., Ltd.
    
    China
    
    
    100
    %Shenyang JinBei Automotive Industry Holdings Company Ltd.
    
    China
    
    
    98
    %Shenyang Xinjinbei Investment and Development Co., Ltd.
    
    China
    
    
    99
    %Shenyang Brilliance Dongxing Automotive Component Co., Ltd.
    
    China
    
    
    100
    %Shenyang JinDong Development Co., Ltd.
    
    China
    
    
    75.5
    %Shenyang ChenFa Automobile Component Co., Ltd.
    
    China
    
    
    100
    %China Brilliance Automotive Components Group Limited
    
    Bermuda
    
    
    100
    %Southern State Investment Limited
    
    BVI
    
    
    100
    %Beston Asia Investment Limited
    
    BVI
    
    
    100
    %Pure Shine Limited
    
    BVI
    
    
    100
    %Key Choices Group Limited
    
    BVI
    
    
    100
    %Brilliance China Automotive Finance Ltd.
    
    BVI
    
    
    100
    %Jointly Controlled EntitiesMianyang Xinchen Engine Co., Ltd.
    
    China
    
    
    50
    %Shenyang ChenBao Automotive Sales Service Co., Ltd.
    
    China
    
    
    49
    %Shenyang HuaBao Automotive Sales Service Co., Ltd.
    
    China
    
    
    49
    %Shenyang Xinguang Brilliance Automobile Engine Co., Ltd.
    
    China
    
    
    50
    %BMW Brilliance Automotive Ltd.
    
    China
    
    
    49
    %Associated Companies(1)Chongqing FuHua Automotive Sales Service Co., Ltd.
    
    China
    
    
    29.4
    %Shenyang Aerospace Mitsubishi Motors Engine Manufacturing
Co., Ltd.
    
    China
    
    
    12.8
    %
   (1)
    
    Brilliance China Automotives 8.6% indirect interest in Compass Pacific
has been reclassified as investment securities since Brilliance China
Automotive is unable to exert significant influence over Compass Pacific
and no longer has affiliates serving on the Compass Pacifics board of
directors. Property, Production Facilities and Equipment The Shenyang municipal government granted to Shenyang Automotive the right
to use three parcels of land situated in the northern, eastern and western
sectors of Shenyang with a total area of 25




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##### 



approximately 890,000 square meters, approximately 50% of which is
currently utilized by Shenyang Automotive and the BMW joint venture. These
land use rights are effective for the term of Shenyang Automotive, which
expires in 2021. The western parcel consists of 70,000 square meters, 40,000 square meters
of which is occupied by a mid-priced minibus production facility that is
capable of producing 12,000 vehicles per year. This facility is currently
utilized to produce a small number of special purpose minibuses and can also be
used to produce components as well. The northern parcel covers 40,000 square meters and is used by Shenyang
Automotive primarily as a technical training facility. The eastern parcel covers 780,000 square meters, including Shenyang
Automotives and the BMW joint ventures production facilities. Shenyang
Automotives minibus facility currently has a production capacity of 80,000
minibuses per year, using two shifts of workers. This facility is specially
designed for the manufacture and assembly of deluxe minibuses and mid-priced
minibuses and consists of four workshops. The stamping and assembly workshops
currently have annual production capacities of 80,000 and 90,000 units,
respectively, based on two shifts of workers, and can be increased to 120,000
units based on three shifts. The painting workshop currently has an annual
production capacity of 120,000, based on two shifts of workers. In 2003, Shenyang Automotive completed the construction of new
manufacturing facilities for sedans (including the Zhonghua sedan), which has a
production capacity of 100,000 units, based on two shifts per day. The new
manufacturing facilities are located adjacent to Shenyang Automotives
previously existing minibus production facilities in the eastern parcel and
include new pressing, welding, painting and final assembly lines. Dies and
other key production equipment were purchased from leading European equipment
manufacturers for the Zhonghua sedan. The total costs for completion of this
expansion project were approximately US$350.0 million, including new equipment,
construction costs and other expenditures, but excluding the design costs for
the sedans. See Item 5  Operating and Financial
Review and Prospects  Liquidity
and Capital Resources. Certain workshops in these new sedan manufacturing facilities are
currently shared with the BMW joint venture, including part of a welding
workshop for the 3-Series sedan, all of the painting facilities, and part of
the Zhonghua sedan assembly shop, which is currently used by the BMW joint
venture to test BMW sedans. Shenyang Automotive transferred legal titles and ownership of certain
buildings in its eastern parcel to the BMW joint venture for use in the
production of BMW sedans. The agreement also states that the BMW joint venture
will lease back a substantial portion of those buildings to Shenyang
Automotive. The BMW joint venture also has the option to require Shenyang
Automotive to purchase back such buildings at the purchase price less
depreciation upon the occurrence of certain events, including the passing of a
valid resolution pursuant to the joint venture contract by the board of
directors of the BMW joint venture. For financial reporting purposes, the
buildings were retained as fixed assets on the balance sheet of Brilliance
China Automotive and the portion of consideration received from the BMW joint
venture is treated as a financing and will be partially offset against the
lease rental payable in future years. In December 2003, the BMW joint venture purchased certain machinery and
equipment from Shenyang Automotive for use in the production of BMW sedans. The
agreement of sale includes an option for the BMW joint venture to require
Shenyang Automotive to purchase back such machinery and equipment at the
purchase price less depreciation upon the occurrence of certain events,
including the passing of a valid resolution pursuant to the joint venture
contract by the board of directors of the BMW 26




---



##### 



joint venture. This machinery and equipment is maintained by the BMW
joint venture for the manufacturing of its products, as well as to provide
certain services to Shenyang Automotive upon the payment of a service fee,
which is a predetermined fixed charge per unit based on the number of Zhonghua
sedans produced by Shenyang Automotive using this machinery and equipment. 27




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##### 



SIGNATURE The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F/A and that it has duly caused and authorized the undersigned
to sign this amendment on its behalf. BRILLIANCE CHINA AUTOMOTIVE
HOLDINGS LIMITED/s/ Wu Xiao An
     WU Xiao An
     ChairmanDate: June 29, 2004