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JAC to break ground in Vietnam

By Wan Zhihong and Li Fangfang (China Daily)
Updated: 2010-03-10 10:01

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A Jianghuai truck is displayed at a recent auto show in Zhengzhou, Henan province. SHA LANG/FOR CHINA DAILY

BEIJING - Anhui Jianghuai Automobile Co Ltd (JAC), an auto producer based in Hefei, will start construction on its first overseas plant to produce trucks in Vietnam in April, the company chairman said on Tuesday.

The plant, a joint venture with Vietnamese partners, will mainly produce medium- and light-duty trucks, Zuo Yan'an, chairman of the company, told China Daily on the sidelines of the annual, ongoing National People's Congress session.

Construction of the plant is part of the company's overseas development, said Zuo. The company plans to export 15 percent of its products to overseas markets by the end of China's 12th Five-Year Plan (2011-2015).

By that time the company's total output is expected to rise to 1 million vehicles, he said.

JAC Motors also said last year that it was considering establishing a manufacturing base in Brazil.

JAC produced 322,000 automobiles last year, but with only 6 to 7 percent being exported to its main overseas markets in the Middle East, South America and Southeast Asia. The company plans to produce 400,000 autos this year, said Zuo.

JAC has also worked to develop clean energy vehicles. The company's clean energy bus has already been put into commercial use, and the firm is now doing research and development on green cars.

Analysts said domestic automakers have been smart to begin shifting their focus recently from product exports to capital outflow, as overseas production might reduce costs, avoid trade barriers and from a long-term perspective, establish Chinese brands in the international market.

Hu Song, an auto analyst with Haitong Securities, warned Chinese automakers that overseas production also brings many challenges from local policies and laws as well management risks.

China's biggest homegrown vehicle exporter Chery boosted its global production network to 15 destinations by adding six assembly plants outside the mainland last year.

Brilliance Auto, Chinese partner of German luxury carmaker BMW, has opened an assembly plant for producing its Jinbei-branded light-duty trucks since 2004 in Vietnam.

Chongqing-based Chang'an Auto, which has already set up five overseas plants, also said that it would invest more than $80 million in South Africa to establish a production plant and a financing company in the next five years.