Commercial Vehicle Enterprises to Accelerate Plants Construction in Overseas Markets

www.chinatrucks.com：In recent years, domestic commercial vehicle enterprises significantly accelerated their pace to make investments and construct plants overseas. A increasing number of Chinese commercial vehicle enterprises are changing their market strategies from singular product output to product output combined with industrial output and capital output. In 2014, commercial vehicle enterprises continue to expand overseas markets.

2014 major commercial vehicle enterprises overseas factories construction plans

Currently, Chinese commercial vehicle enterprises construct overseas factories in three main ways. The first way is to with local partners (mostly bus manufacturers or dealers), who are responsible for the construction, future factory management, product sales, etc., while Chinese enterprises are mainly to provide some technical support, authorize production models, as well as conduct quality supervision.

The second way is to invest overseas manufacturing plant, holding a large proportion of equity and having control over the plant to some extent.

The third way is to build overseas wholly-owned factories. According to incomplete statistics, in the first quarter of 2014, five commercial vehicle enterprises announced plans to build new plants overseas.

1. Foton Bus
Plant Country: Brazil
Partner: Government of Rio Grande do Sul in southern Brazil shares. Rio Grande do Sul government has passed laws to encourage the production of trucks. Under the new law, the government can invest up to 48 million to buy Foton’s shares, which is equivalent to 20% of the total loan amount. In addition, the state government has provided land for the plant, official funding and tax incentives.
Production models: Expected to produce two types of commercial vehicles, including one light truck and one minivan.
Construction time: The construction of the plant is currently awaiting the necessary environmental permits, expected to be released in April 2014.
Plant capacity: 21,000 per month
Targets: To occupy 5% Brazilian market in seven years and become an export platform

2. FAW Jiefang
Plant Country: South Africa
Partner: Co-invested by the FAW Group and China-Africa Development Fund. The base plans to invest in two phases. In the first phase, investment plan is $ 79,960,000, including: restructuring of the South African company FAW, constructing FAW assembly plant in Coega, building 4s flagship store and spare parts store in Johannesburg, as well as distribution center. In the second phase, the plan is to invest a 30,000 cars project, currently in the research phase.
Invested capital: 600 million rand (about 500 million yuan)
Production models: Medium and heavy truck
Plant capacity: Annual output of 5000
Production time: May 2014
Targets: The FAW production base in South Africa is by far the largest foreign investment project.

3. Great Wall
Plant Country: Brazil
Partner: Latin America Automotive Group
Investment funds: About $1 billion (about 6 billion yuan), including the construction of Brazil's local dealer network.
Production models: one pickup model, two SUV models
Construction time: Middle of 2014
Plant capacity: 50,000 in the first period and expected to achieve 100,000 in later period

4. SAIC Commercial Vehicle
Plant Country: Thailand
Partner: SAIC signed an agreement with Thailand's Chia Tai Group for the joint company MaxusMotor (Thailand) Co., Ltd..
Production models: MAXUS
Construction time: Factory currently under preparation. Production time is not yet clear.
Plant capacity: 4000
Targets: Thailand, Malaysia and Singapore, the three markets accounted for 87% of
the entire ASEAN automobile market share. According to the proposed China-ASEAN Free Trade Area rules, as long as any of the Member States build assembly plants in the ASEAN, and the localization reaches a certain percentage, it will be able to take advantage of duty-free preferential treatment to each other in the ASEAN, and then export to Southeast Asian countries.

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