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Chinese Automotive Industry is interested in creation light vehicles assembly in Belarus

04 April 2008

Chinese Automotive Industry is interested in creation light vehicles assembly in Belarus. This was announced at the meeting of members of the Belarusian Confederation of Industrialists and Entrepreneurs (BCIE) with members of the delegation of Chinese automobile companies headed by Chen Jianguo, the deputy inspector of the State Committee on Development and Reform industry department on the 3rd of April in Minsk.

The Head of Chinese delegation admitted, - “We are ready to consider all the propositions of Belarusian party concerning trade and investment cooperation”. Chinese manufacturers are seeking for partners to organize light vehicles assembling on the territory of the country.

Possible forms of cooperation (import of ready made brand-new cars or organization of light vehicles assembling from Chinese constituent parts); car models which could be produced were discussed at the meeting in details. Belarusian party provided Chinese partners with regulatory legal acts, on electronic media, aimed to create favorable conditions for increasing investment activity and developing of business in Belarus. As Sergey Skomorokh, the financial director of JV CJSC “Unison” admitted the enterprise was interested in foreign investments and it was ready to consider the proposition of Chinese party. He believes nowaday’s Belarusian customer is able to acquire any automobile of the famous world make. At the same time, they want to have reliable car of high quality. Therefore, it is necessary to produce a good, reliable and competitive, in price brackets, automobile, including the one of economy class. Sergey Skomorokh also admitted that during organization of assembly enterprise in order to satisfy the interests of supplier and consumers it is necessary to stick to price proportion. Belarus needs 50% of constituent parts to assemble automobiles are made here. In this case a manufacturer has tax benefits and customs privileges. This very price factor is attractive for Belarusian party.

Nowadays, “Unison” plans to organize welding fabrication and paint spray processing of light vehicles body. “Our shareholders are eager to implement this project in partnership with one of reliable world companies. We are interested in attraction of foreign welding and painting technologies, and metalworking. We are now seeking the option able to provide the most suitable technologies.”, - financial director of the enterprise underlined.

He also reported that JV’s statutory fund has the government take represented by the Ministry of Industry, the English company “Fenox” and the enterprise “Unison” itself. The process of 40 % “Unison” shares purchase by Iranian automobile company Iran Khodro hasn’t been completed yet.

Sergey Varivoda, the director of OJSC "Chinese automobiles" (official dealer of Chinese automakers Chery and Great Wall in Minsk) believes that Belarusian market capacity is not sufficient enough to organize its own automobile assembling. According to some estimates, by 2010 the volume of light vehicles sale will amount to 50 thousand units. “By this time Chinese manufactures will manage to occupy 10% of the market in case they are able to observe the following conditions: to maintain the current price level for their production, to increase quality level and certify automobiles by Euro-4 standards, and also to expand the dealer network for automobile sale and service.”, - Sergey Varivoda pointed out. According to his forecasts by 2010 Belarus will have 7-8 Chinese automobile brands. The director believes that for the period of the next 2-3 years it is reasonable to promote ready-made Chinese automobiles more actively and then organize assembling with Chinese vehicle sets.

The director of OJSC "Chinese automobiles" also underlined that “Belarus today has unprecedented tax benefits and customs privileges for new automobiles import.” Therefore, nowadays it is more profitable to import new automobiles. At the same time, he believes Belarus should “take more serious measures to restrict second-hand automobiles import.” It is also reasonable to increase duties against import of all automobiles on the whole. At that time it will be more profitable to import assembly sets.

Continuing this discussion Sergey Skomorokh, the JV CJSC “Unison” director defined more precisely that the enterprise is located in FEZ “Minsk” and, therefore, it has preferential conditions to import constituent parts, and there are also some particular tax preferences for Belarusian market.

Alongside with that, the Parties objectively consider all the possible ways of cooperation either in the field of trade or in the field of light vehicles assembling.

In opinion of Mikhail Visotski, the chief designer in the field of automotive engineering, the chief executive of the State Scientific Establishment “United Institute of Machinery Building” of the NAS “a good, competitive car will never be hampered by any duty, it will come through it and achieve a dominant position in the market.” “We now need to choose definite makes, which will have demand on our market in order to make a customer acquire it.”, - the designer believes.

Belarusian manufacturers having appeared at the meeting also admitted that Belarus today has enough capacities and premises to locate assemblies. However, there already appear some problems concerning the lack of labour force. Our experts also acknowledge that production costs of component parts manufacturing in China is several times lower than the one in Belarus.

According to Anatoly Yazvinski, director on Coordination and Development of the BCIE, it is possible to develop two projects simultaneously in Belarus: import of ready-made Chinese automobiles and organization of their assembling. At the same time, experts think that it is necessary to consider each particular make in details, find optimal economic effect for each party, and then start working.

As Zhou Yinzhe, a representative of Chinese automotive company Chery pointed out “in case the Chinese and the Belarusian Governments favour manufacturers’ propositions, joint projects may be a success.” He reported that in the course of their visit in Minsk the businessmen had studied the Belarusian car market and they considered it to be an attractive one.

After negotiations at BCIE Chinese and Belarusian manufacturers went to JV CJSC “Unison”.

BelTA