On December 2, witnessed by Chinese President Xi Jinping and South African President Jacob Zuma, China and South Africa signed 26 bilateral agreements, with a total value of 41.9 billion RMB. Xu Heyi, Chairman of BAIC Group and Geoffrey Qhena, CEO of Industrial Development Corporation (IDC), South Africa signed a memorandum of understanding on the cooperation in the BAIC South Africa Plant project, with a total value of 5 billion RMB and a planned annual output of 100,000 vehicles.
Scheduled to break ground in the first half of 2016 and go into production in late 2017, this plant is expected to become an automotive manufacturing plant created with the largest one-time investment in South Africa and even Africa.
The conclusion of this agreement marks a new milestone in the globalization of BAIC Group and will be a new model for the globalization of Chinese independent automotive brands.
Under this agreement, the two sides will jointly establish an automotive manufacturing plant on the coastal area of South Africa and introduce BAIC's all own brand series, including passenger vehicles and other automotive products suited for the South African market. Phase 1 of this project will go into production in late 2017.
In recent years, BAIC has consistently conducted group oriented operations, integrated its business resources, and pressed ahead with its strategy of globalization in a bid to achieve its ambitious goal –“BAIC globalization”. Based on its advantages in technology, brand, finance, and industrial chain operation, in coordination with facility agriculture and general aviation industry, BAIC has worked towards building an international business platform covering key global markets--BAIC International Development Co., Ltd (BAIC International). By means of trade, investment, joint venture, cooperation, etc., BAIC International will export brands, services, products, technologies, and finance to support Africa's strategy of "tri-network construction and infrastructure industrialization" and agricultural modernization, improve Africa's traffic conditions, and promote the development of high-end aviation industry and facility agriculture in Africa.
BAIC has comprehensively planned the strategy of African market development from a strategic height and will improve its capacity for automotive R & D, manufacturing, and quality management based on its manufacturing plant in South Africa. It also plans to increase the sales of new and used vehicles through automotive finance, so as to build the plant into a LHD & RHD vehicle manufacturing plant based in South Africa with business covering main markets in South Africa and other African countries. Also, BAIC will utilize South Africa's favorable bilateral and multilateral international trade agreements to extend itself to Europe, Oceania, and other markets, thus becoming a regional operation management center exporting products, technologies, management, talents, and finance.
Approved by the Parliament of the Republic of South Africa in 1940 and owned entirely by the South African government, the IDC has total assets of 10.7 billion US dollars and gross debt of 2.4 billion US dollars. IDC's long-term debt rating and sovereign rating published by Moody's are both Baa2, which belongs to moderate credit risk. With operations in South Africa and the rest of Africa, IDC is a financial company (institution) providing financial support for enterprises and investment projects which promote the development of industrialization in Africa.
The cooperation between the two enterprises which will share resources such as market strategies, policies, and business financing will play a positive role in South Africa's efforts to introduce investment, create jobs, increase exports and accelerate economic growth, promote the sustained and healthy development of South Africa's economy and society, and become a new model for China-Africa cooperation.
The plant will create 2,500 jobs directly, and over 10,500 jobs for upstream and downstream industries indirectly. At its full capacity, the plant will generate an industrial added value of 12.4 billion RMB for vehicles and 6.2 billion RMB for parts. Over 50 percent of the plant's products will be exported to contribute an export trade volume of about 6.2 billion RMB to South Africa.
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