Italian car manufacturer Fiat is launching a specially designed version of its Palio model for the Chinese market.

Fiat is hoping to sell 20,000 of the vehicles in China this year, and 50,000 in 2003.

Despite its huge population, China only has five million cars on the road - 750,000 of which were registered last year.

Manufacturers are increasingly keen to tap into a potential market of more than 1.3 billion people, many of whom are growing increasingly wealthy.

On-going expansion

Fiat's UK chief executive, Richard Gadeselli, told the BBC's World Business Report that the cars would be produced in Nanjing in a joint venture with Yeujin Motor Group.

The plant will be located near an Iveco truck plant which Fiat opened in the mid-80s.

Mr Gadeselli emphasised that the models produced in China would not be exactly the same as those manufactured in Italy.

"The common factor in these developing markets is that the road infrastructure isn't as well produced as it is in a mature market such as North America, Japan or Europe," he said.

This means that the suspension systems need to be more rugged.

The Palio project is part of a concerted push by Fiat to develop increase its sales in emerging markets.

The Palio was first launched in 1996 in Brazil, followed by Argentina.

"We have (since) opened production hubs in Turkey, Poland, Egypt, South Africa, India, Vietnam, China - and the next one will be Russia," said Mr Gadeselli.