BAIC chairperson Xu Heyi says the company’s assembly plant in Coega will service the entire African continent.Photo: Will Walton
JOHANNESBURG - The R11 billion invested in a semi-knocked down (SKD) vehicle assembly plant in South Africa by Beijing Automotive International Corporation (BAIC) forms part of a four-pronged international expansion strategy by the Chinese state-owned company.

Xu Heyi, the chairperson of BAIC International, said that the company’s assembly plant in Coega’s Special Economic Zone would service the entire African continent and not just the South African market.

“South Africa is only the gateway country towards the continent of Africa,” Heyi said at a milestone celebration at BAIC’s plant in Coega to prepare for the production of SKD vehicles on Tuesday.

BAIC said 60percent of the vehicles manufactured at the plant, which would have an initial annual capacity of 50000 units in the first phase but would eventually increase to 100000 units, were destined for export markets in Africa, the Middle East and Latin America, with remaining 40percent for the South African market.

“After the plant is put into production, it is planned to manufacture BAIC passenger cars, SUVs (sports utility vehicles), light trucks and other automotive products (that are) suitable for these markets,” he said.

Heyi said that BAIC’s international strategy was not to just chase after markets, but to embark on market expansion that is based on thorough and careful studies to establish their own international business model.

He said BAIC had major international expansion plans and secondary plans.

Heyi said the major expansion plans involved the establishment of four international headquarters for different purposes.

He said South Africa was the first one where it would use its production plant in Coega, BAIC’s first full functional manufacturing base overseas, to cover the entire African continent.

Heyi said another international headquarter would be established in Mexico, from which it would try to cover the entire Latin-American and North American markets, while its headquarters in China would cover the South East Asia market.

He said the fourth BAIC headquarters would be established in India, but it would have a slightly different emphasis, because its plant would not focus on passenger vehicles but commercial vehicles.

“These are just the four major international headquarters we’re going to establish. Apart from those, we still have many other secondary developments. We all know that big opportunities always come from small practices. Maybe after 10 or 15 years we will see the small opportunities become something really substantial,” he said.

President of the People’s Republic of China Xi Jinping and South African president Cyril Ramaphosa unveiled the R2billion first phase of its planned R11bn investment in South Africa, and the first BAIC vehicle ever assembled on African soil, via a video link from Centurion.

Busi Mabuza, the chairperson of the Industrial Development Corporation, which has a 35percent shareholding in the project, described it as “a wonderful milestone”.

Mabuza referred to the BRICS Summit taking place in Johannesburg, adding that the benefits of South Africa joining forces with like-minded nations through institutions such as BRICS were already apparent for people to see.

She said the multi-billion-rand BAIC SKD vehicle assembly plant project was the largest greenfield project in the industry in South Africa in more than 40 years.

The investment by BAIC in South Africa flowed from the signing of 25 bilateral agreements between South Africa and China in 2015 with a total value of R94bn.

The investment has provided significant job creation boost to South Africa’s economy, with 1540 direct construction jobs created to date following the ground-breaking ceremony in Coega in 2016, with BAIC anticipating that it would be providing permanent employment to 120 people by the end of this year.

BAIC reported that full scale production of its compact special utility vehicle, the BAIC X25, would commence in the fourth quarter of this year.

The first phase of the BAIC plant in Coega comprised a 4200m2 office block, a 42000m2 assembly and body shop and the installation of robotic equipment.

Construction would commence shortly on a 21000m2 paint shop, which was scheduled to be completed by the end of next year.

BAIC will only qualify for incentives in terms of the Automotive Production and Development Programme once its paint plant is operational and it can move to completely knocked down production.

-BUSINESS REPORT