Wandering China

An East/West pulse of China's fourth rise from down under.

Chinese automakers to tap Brazil through local production [Want China Times]

Brazil was the fifth largest auto market in the world in 2011. Sales topped 3.6 million cars then and Chinese cars accounted for a quarter of the market. Interdependent synergy where bridges can be found?

For more, see

Transnational media financial coverage: China’s Cars Grab Brazil Market Share (Bloomberg, September 21, 2011)

Chinese state media coverage: Feature: Chinese cars win hearts of Brazil’s new middle class (Xinhua, October 17, 2012):

“No one had anything good to say about the quality of Chinese products in the past… That was the Brazilian people’s first impression of China,” Fernando Morais, general manager of the Chinese state-owned JAC dealership at Botafogo. It made 494,800 vehicles in 2011. Exports began in 1990 after 26 years of being established. They started with Bolivia, today its products are claimed to be sold in over a hundred countries.

For a perspective from an internationalist automotive journalist who was recently in Brazil, check out Motor Mouth: I’m going back to Brazil! (National Post, October 25, 2012):

Auto sales are growing so rapidly that traditional automakers — such as Volkswagen and Renault — are expanding their manufacturing base here (the French company expanded its Ayrton Senna complex to build 100,000 more cars), while even the Chinese upstarts — JAC, for instance — are offshoring to Brazil to beat local tariffs. (The Chinese presence at the Sao Paulo auto show is huge, dwarfing its national presence at any mainstream exhibition I’ve attended. Great Wall, Chery and the aforementioned JAC all had huge booths as did Changan and Haima, along with smaller participation by Jonway and Landwind.). But despite their obvious ambitions, their displays are definitely second-rate compared with even the cheapest of the established marques. Indeed, if their products lag mainstream brands as much as their show displays, it may be some time before they are competitive.

– – –

Chinese automakers to tap Brazil through local production
Staff Reporter
Source – Want China Times, published October 26, 2012

Chinese carmakers are setting up production bases in Brazil, which is currently the world’s fifth-largest auto market, to tap into the surging business opportunities offered by the South American country, Shanghai’s First Financial Daily reports.

On Oct. 23, Brazilian car distributor Districar announced that it will be adding Changan and Haima to the list of Chinese auto brands it distributes, including Chery and JAC, in Brazil from early next year.

The announcement preceded the Sao Paulo International Motor Show, which opened on the following day, where China’s Great Wall Motors unveiled its plan to enter the Brazilian market in the second half of 2013 and to set up factories in the country.

Great Wall, which was taking part in the Sao Paulo motor show for the first time, said its planned factories in the country would help it avoid the high import taxes.

In fact, similar plans were revealed by Mou Gang, vice president of Lifan Group, in a recent interview with the newspaper, following the completion of its acquisition of Paraguay-based auto company Besiney.

With newly acquired Besiney, Lifan plans to build factories in both Paraguay and Brazil, which are expected to commence production in 2014, with an annual capacity for producing 10,000 cars, the newspaper said.

Chery’s factories in Brazil, which are currently under construction, are expected to begin production in 2013.

While Brazil was ranked as the world’s fifth-largest auto market in 2011, with sales of 3.6 million cars, the industry predicted that the country will climb to third place by 2016.

Chinese cars accounted for 25% of the car imports of Brazil in 2011, after Chinese brands successfully captured the middle to low income consumer market in the country, the newspaper said.

However, the Brazilian government’s move in April to protect local manufacturers by imposing a 30% industrial product tax on imported cars, had at one point created an impediment for JAC’s planned investment in Brazil, the newspaper said.

The tax imposed on foreign-made cars dragged down JAC’s monthly sales in Brazil from 3,000 to 1,800 cars, the newspaper noted.

Brazil announced on Oct. 7 the latest plan for the development of the country’s auto industry, which will offer tax deductions to car companies, which source at least 65% of the components from Brazil or member states of the South American trade bloc Mercosur.

On that same day, JAC announced its US$450 million project to build its first factory in Brazil, which is set to begin producing 100,000 cars every year from the second half of 2014.

JAC’s decision also reflected how local government policies would affect Chinese car companies’ plans for expansion into the Brazilian market, the newspaper said.


Filed under: Automotive, Beijing Consensus, Brazil, Charm Offensive, Chinese Model, Domestic Growth, Economics, Environment, Finance, Influence, Intellectual Property, International Relations, Modernisation, Peaceful Development, Public Diplomacy, Soft Power, Strategy, Technology, The Chinese Identity, The construction of Chinese and Non-Chinese identities, Trade, , , , , ,

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