African success revs for auto firm

Visitors look at trucks of FAW during the 15th Shanghai International Automobile Industry Exhibition, known as Auto Shanghai 2013, April 21, 2013. [Photo/dfic.cn]

China FAW Group Corp takes the road less traveled for sustained growth in Africa, Li Lianxing reports from Johannesburg

The brand FAW may not ring a bell with most people outside China, but it certainly strikes a chord on South African roads.

China's oldest vehicle manufacturer has been carving an indelible impression in South Africa since 1994 with its range of affordable heavy-duty trucks and other commercial vehicles. Next, if things go according to plan, it will start making passenger vehicles in Port Elizabeth on South Africa's southern coast.

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More important, China FAW Group Corp - or FAW, due to its original name of First Automotive Works - expects its robust African performance to give momentum for expansion into other developed markets like Europe and the United States. Established in 1953, FAW has joint ventures with many leading global vehicle makers, including Volkswagen AG, Audi AG, Toyota Motor Corp, General Motors Co and Mazda Motor Corp.

"Unlike other African markets that are full of second-hand cars, South Africa has a relatively better-established vehicle market, with an advanced sales network and high demand for quality market services," said Hao Jianyu, deputy general manager of Africa Investment Co, a joint venture between FAW Group and the China-Africa Development Fund. "In addition, it has a mature financing system that makes buying and selling of cars easier. There were no entry barriers for us."

Set up in 2010 in Changchun, Jilin province, the AIC is responsible for FAW Group's business development in Africa. FAW Vehicle Manufacturers South Africa (Pty) Ltd, an AIC unit, handles the FAW business in South Africa.

"The market requirements in South Africa are more or less similar to those of Europe and North America," Hao said. "We are confident that we can replicate our success here and in other overseas markets."

The real focus for the company, though, will be on the new assembly line in the Coega Industrial Development Zone near Port Elizabeth.

When complete, it will have a knocked-down assembly line, body-building workshop and paint shop. It will include a product pavilion and an employee-training center. The project, spread over 87,000 square meters, envisages investment of $40 million.

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