Chinese automakers thrive in South Africa by meeting local needs

By Lu Anqi | NO. 47 NOVEMBER 24, 2016

In its spacious showroom in Isando, a small town northeast of Johannesburg, Chinese automaker FAW Group displays its most popular vehicle models assembled in its plant in Port Elizabeth, one of South Africa’s largest cities, located east of Cape Town.

“It’s called the J5,” Ngoni Chaitwa said, pointing at a large white truck. “It can pull a trailer with a load of up to 34 tons. We call it ‘Beautiful Africa’ because it is doing very well in Africa.”

Chaitwa, a salesman with the company for three years, said FAW vehicles are doing well in the market because they are reasonably priced and most importantly, made in South Africa. This makes having access to spare parts and maintenance much easier.

Pioneer footprints
With the deepening of China-Africa cooperation, Chinese automakers have begun setting up factories in Africa, turning the dream of “Made in Africa for Africa” into a reality.

As a pioneer Chinese automaker, FAW’s journey to Africa began in the 1970s when its vehicles were used in the construction of the Tanzania-Zambia Railway. “The demand has kept rising ever since,” said Hao Jianyu, Deputy CEO of FAW South Africa. “We are probably the first Chinese brand to have set foot on the continent.”

According to Hao, FAW started selling and shipping trucks to South Africa in 1994 and 10 years later established an assembly plant with an annual producing capacity of 5,000 trucks in the Coega Industrial Development Zone outside Port Elizabeth. The total investment in 2004 stood at $80 million.
“The launch has proved to be a big step forward in FAW’s localisation,” Hao said. “People know that we invest here and are determined to ‘take root’ in Africa, so they have confidence in us. Our market share has witnessed continuous growth since 2013, rising from the 0.9 percent growth rate then to 4.2 percent in the first three quarters of 2016, despite the weak market demand resulting from the global economic downturn.”

In 2015, the Coega plant produced 1,000 vehicles, mainly sold in South Africa. In 2016, the target is between 1,200 and 1,300.

Hao attributed the growth also to the fact that Chinese automakers have become better known and are adapting to local needs. FAW South Africa has 28 dealers in the country and more than 100 on the continent. It is building sales and after-sales networks to expand business and improve service.

This article first appeared on Beijing Review. Beijing Review is China’s only national English weekly news magazine published in Beijing by the China International Publishing Group (CIPG). 

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