China's 5th largest manufacturer, BAIC has begun assembly of its X25 compact crossover in Port Elizabeth as part of an R11-billionjoint investment with the Industrial Development Corporation (IDC). BAIC, which entered the local new vehicle market in 2017, will also increase its dealer footprint to 27 outlets bythe end of the year.

Like most of us, I hadn'theard of BAIC (pronounced “Bike”) until quite recently,buttheChinese vehicle manufacturer is one of the largest manufacturers in the world.China is a vast car market that has largely kept to itself (that is to say it has made relatively minor forays into Western markets, including ours), but currently, with the backing of the Chinesegovernment, the multi-billion-dollar industry is keen to expand globally.

This week theChinese President, Xi Jinping, alongside President Cyril Ramaphosa unveiledthe very first South African assembled BAIC X25, which was produced atthe manufacturer's South African factory, located in Port Elizabeth's Coega Special Economic zone,via live video link. As reported in the general media recently, this historic event marks the start of strong SA-China economic relations over the coming years.

Record-breaking investment

BAIC claims that since the start of the project, more than 1 540 construction jobs have beencreated and local SMMEs have secured R200-million worth of contracts associated with it.The BAIC agreement was signed in 2015 and is one of 26 bilateral agreements signedbetween South Africa and China. Together this agreement totals a staggering R94 billion, ofwhich R11 billion will be invested by BAIC.

The recently completed 1st phase includes the ability to assemble vehicles that areshipped into South Africa in semi-knocked-down (SKD) form. The SKD vehicles will be built on a rudimentaryproduction line until the production switches to completely-knocked-down (CKD) later this year. BAIC aims to roll off the first (CKD) X25 in thefinal quarter of 2018 and to increase the number of its dealers from 17 to 27 by the end of the year.

A big concern for South Africans is how foreign investment affects our local economy – ifthe local industry will benefit from these investments. It is with that in mind that BAIC SAwill endeavour to set up relationships with local business to supply up to 30% of the partsneeded for BAIC cars by 2019. The next milestone will be to increase that ratio to 60%within the next few years. For context Volkswagen South Africa sources around 70% of its Polo Vivoparts fromlocal suppliers.

BAIC chairmanXu Heyi said South Africa was a gateway to other African nationsand the factory was away for BAIC to expand into the Middle East and Latin America. BAIC intend to ship 60% ofthe cars manufactured in South Africa to other nations, thus increasing theworldwide footprint of BAIC and simultaneously setting up a satellite plant in a strategic location. Incidentally, the Coega plant is the first BAIC plant outside China.

BAIC X25 compact crossover

The X25 is a1.5-litre compact crossoverthat competes with products such as the RenaultDuster and Ford Ecosport. BAIC CEO is confident that thanks to the experience thecompany has gained in their domestic market, “BAIC can compete with any car company inthe world,” Xu Heyi said, before adding that producing the X25 locally would ensure that the price of the vehicle wouldbe much lower than if it wasimported from China.

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