BEIJING - Chinese
auto maker Brilliance Auto recently signed an
agreement with PMC of South Korea on jointly
launching an assembly plant in North Korea.
The North Korean facility will be
Brilliance Auto's third after its operations in
Egypt and Vietnam.
Brilliance Auto is
neither the first nor the most active of the
Chinese auto makers making direct investments
abroad. Quite a few have already done or are doing
so. Among them are Chery, Geely, Jianghuai,
Chang'an, Great Wall, and BYD Auto, which have
launched greenfield auto plants abroad, and Shanghai
Automotive and Nanjing
Automotive, which have invested abroad through
merger and acquisition.
Chery is a leader
in this regard, making great efforts on building
CKD (complete knockdown) factories abroad in
recent years. Aside from the existing assembly
plants in Iran and Russia, it is looking for such
opportunities in Egypt, Romania, Turkey,
Indonesia, Italy and Argentina. Its Argentina
joint-venture project with the local Socma group,
involving investment of US$100 million, will be
controlled by Chery. If it goes ahead, it will be
the first China-invested auto venture in South
America. Chery plans to own 12 assembly plants
worldwide within a short time.
Geely also
has been active in going global. It has invested
in Malaysia and is preparing for another new
factory in Russia.
Jianghuai, meanwhile,
has established light-truck assembly plants in
Vietnam, Malaysia and Indonesia.
Industry
analysts hold that excessive capacity in the
domestic market after rapid expansion in recent
years is prompting Chinese auto makers to look for
overseas markets. However, they are often hit with
tariff barriers from the importing nations. For
instance, Russia levies about a 25% tariff on
complete vehicle imports, but only about 3% on
knockdowns.
Direct investment overseas is
regarded as a solution to such barriers.
So far, the overseas investments of
Chinese auto makers have been concentrated in
emerging markets such as the Middle East,
Southeast Asia and Africa.
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