Chinese boost for South African auto manufacturing

2 December 2015

As fellow members of the BRICS association of emerging economies along with Brazil, Russia and India, the relationship between China and South Africa (and indeed, the rest of Africa) is an important one.

The Forum on China-Africa Co-operation (FOCAC) is an institutional vehicle for political, economic and cultural interaction between China and Africa; the summit is expected to mark a qualitative shift in those relations.

Held on 4 and 5 December with the theme “Africa-China progressive together: win-win co-operation for common development”, the summit will culminate in a meeting between South African President Jacob Zuma and his Chinese counterpart, Xi Jinping.

According to Chinese foreign minister Wang Yi, trade between Africa and China has reached $220-billion(R3.2-trillion), 22 times higher than it was in 2000 when FOCAC was launched. He was speaking at the Lanting Forum in Johannesburg at the end of November 2015.

There are over 3 000 Chinese enterprises operating in Africa, according to the minister. And with more than 3.6 million visits made between China and Africa, tourism is one of the growing industries that offer mutual benefits.

Even with the slowdown in the Chinese economy, the potential and benefits for South Africa and the rest of the African continent are still very much apparent. Wang said that China planned to still import over $10-trillion in goods, invest more than $500-billion in overseas ventures, including in Africa, and encourage more than 500 million Chinese tourists to travel abroad over the next five years.

In South Africa, China’s presence is slowly growing and beginning to be felt in various industries, including technology, mining and the automotive industry. Jobs are being created, products and commodities are being traded and new markets are being opened between South Africa and China. The Hebei Iron and Steel Group’s steel mill in Phalaborwa, opened in 2014, is just one of the many opportunities being created to herald the new shift. Another venture is the Beijing Automotive Works (BAW) factory in Springs.

A media tour of the facility was arranged by the Industrial Development Corporation and Brand South Africa to give South African and Chinese media a closer look at how Chinese business style works in the South African context.

Beijing Automotive Works

The car maker is one of the many Chinese companies operating in South Africa. BAW South Africa is owned and operated by the Beijing Automotive Industry Company, China’s fifth-largest automotive manufacturer; it has partnered with the Industrial Development Corporation and China Africa Motors in the distribution of BAW minibus taxis across Africa. The vehicles are assembled at the company’s factory outside Springs, in Gauteng.

Opened in 2012, the factory is the base of operations for BAW in the assembly and the promotion, sales and after-sales service of its vehicles. According to BAW chief executive James Chung, daily production at the factory is 25 to 30 vehicles. The company employs 160 people, the majority of whom work on the factory’s assembly line. Here the company’s flagship vehicle, the Sasuka minibus, is assembled from semi-knockdown kits imported from China.

Chung is happy with the relationship built between the company and its growing South African customer base, and hopes BAW South Africa can extend its product range over the next couple of years with light commercial vehicles, sport utility vehicles and passenger cars.

While he has admiration for the processes involved in operating the business in South Africa, he does have concerns about the level of financial freedom, which is often dogged by red tape and over regulation. He thinks this is an obstacle many find daunting when trying to start a business in the country. Yet he hopes he can contribute to finding a way to alleviate the regulations and paperwork involved through discussions with the relevant parties in the government and the motoring industry.

The BAW Sasuka

Similar in shape and style to the ubiquitous Toyota Ses’fikile- the main player in the South African minibus taxi market – BAW offers a little extra included in the sale of the Sasuka to give it the edge in the competitive local market.

In addition to air conditioning as standard in the Sasuka, the minibus also comes with satellite tracking operated by the company itself. The company runs a real-time tracking service for all vehicles sold, which monitors the performance and condition of the vehicle.

The company will even alert owners when the Sasuka is due for its next service.

The service plan, valid for two years or 200 000 kilometres, is included in the price of the vehicle. Servicing is free and taken care of in-house by BAW. It covers everything from the tyres, brakes, oil and parts replacement to the interiors and on-board technology. In addition, the Sasuka comes with on-board DVD system and GPS navigation as standard. The minibus has a rear-wheel drive 2.7 engine with a maximum speed of 156km/h and fuel consumption of 13.7 litres per 100 kilometres.

SouthAfrica.info reporter