BAIC in July held what it described as a “milestone event” to prepare for semi-knocked down (SKD) production of vehicles at the plant. Photo: Reuters

PRETORIA – Beijing Automotive International Corporation (BAIC), the Chinese state-owned company that committed to invest R11 billion in South Africa, now claims that production was set to commence before the end of this year at its vehicle plant in Coega.

South Africa’s Industrial Development Corporation (IDC) has a 35 percent shareholding in the project.

BAIC in July held what it described as a “milestone event” to prepare for semi-knocked down (SKD) production of vehicles at the plant.

The company said at the time that “full-scale production” of its X25 compact sport utility vehicle (SUV) at the plant, its first to be produced and assembled outside China, would commence in the fourth quarter of last year.

However, serious doubts have been expressed in motor industry circles about the claims that the vehicle was manufactured in South Africa.

BAIC said yesterday that construction of the plant has been “making steady progress” under its newly-appointed chief executive locally, Nemo Tian.

Tian said that the new timelines had been established and a new work schedule has been adopted for all contractors on site, with principle contractor Beijing Industrial Designing & Researching Institute (BIDR) set to commence construction activity in the second quarter of this year.

He said that full-scale vehicle production would commence on completion of the assembly and welding facilities, with all construction set to be completed next year.

“This is BAIC International’s first overseas project of this magnitude. We've experienced some challenges and have learnt from them, with the support and guidance of our local shareholders,” he said.

Last September, the local media reported that the construction had been moving at a snail’s pace and all small, medium and micro enterprises (SMMEs) had vacated the premises due to non-payment.

The reports quoted Mandla Mpangase, the spokesperson for the IDC and BAIC SA, as stating that BAIC SA, as the project owner, had earlier that month made its latest progress payment to BIDR, the main contractor for phase one of the project, and the responsibility for prompt payment of all SMMEs fell on BIDR. 

BAIC said data released by the Coega Development Corporation showed that total local labour employed on the project since its commencement until last year totalled 1 839 people.

Production at the plant was to be ramped up over a three-year period from the commencement of production to 50 000 vehicles a year, with production thereafter up-scaled to 100 000 units a year.

Of this, 40 percent were destined for sale in South Africa and 60 percent for export markets, including countries in Africa and South America.

The plant forms part of BAIC International’s long-term globalisation strategy.

BAIC SA has a network of 20 operational dealerships in South Africa.

It's estimated that about 120 BAIC vehicles had been sold in South Africa last year.

Tian yesterday claimed that the project was well on its way to exceed the targeted 35 percent SMME participation and to date construction tenders to the value of R44.1 million had been allocated to SMME’s.

“We remain committed to our contractual obligations of providing work to small local businesses and their development,” Tian said.

BUSINESS REPORT