China's BAIC is ready for the car wars

(Carin Smith, Fin24)
(Carin Smith, Fin24)

Chinese motor manufacturer BAIC is confident it will claim its fair share of the industry market, despite competing with well-known and established brands.

The company expressed these views this week at a ceremony to mark the completion of its R2bn phase one, which includes the semi-knocked-down (SKD) line and satisfactory progress on construction work streams of the vehicle assembly plant.

The entire motor manufacturing plant investment at the Coega special economic zone in Port Elizabeth is worth R11bn.

In an interview with City Press, BAIC International chair Xi Heyi, said: “We have done our research. We have established a very aggressive and sophisticated marketing plan for South Africa. Currently, we have 17 dealerships and expect to increase them to 27 by the end of this year.”

“Remember our target is the whole continent of Africa. South Africa is only our gateway to the continent. We are going to compete with any product produced anywhere in the world. Our aim is to establish our own business model. We are not interested in chasing markets.”

Heyi said BAIC had chosen South Africa as one of its four headquarters throughout the world.

The other three headquarters are in Mexico, which will supply the South America region, southeast Asia and India.

Asked how trade wars between China and America will affect his company, if at all, Heyi said they did not have many dealings with America.

“We can collaborate with Europe and South Korea. We do not have many dealings with American enterprises. The trade wars will not affect Baic’s operations and there should be no worry.”

On Tuesday the first Baic vehicle assembled in Africa was jointly unveiled, via live video link, by Chinese president Xi Jinping and President Cyril Ramaphosa.

Xi was in South Africa to attend the 10th BRICS Summit.

During the live video link, Ramaphosa described the event as a milestone.

Sod-turning for the BAIC plant was held in 2015, but the plant has faced numerous challenges as construction was stopped intermittently by disgruntled local small businesses that claimed they were not being given work.

Ramaphosa said: “This is confirmation of real partnership and cooperation based on solid relations. I am filled with pride, and the whole of Africa is open to us to produce these vehicles and export them.”

Xi said the investment was a result of the memorandum of understanding signed between the two countries in 2015.

He said cooperation between the two countries was going to increase.

During phase one of the project, about 1 500 construction jobs were created and small businesses received R 200 million worth of contracts. About 120 more jobs will be added by the end of the year.

The Industrial Development Corporation, who are partners in the project, said the investment would further redefine economic ties between China and South Africa.

Sixty percent of the vehicles manufactured will be for export, and it is estimated about 100 000 units will be churned out every year.

Ninety percent will be local content as BAIC has already engaged with local suppliers to develop South African supply chains.

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