Chinese automakers want to capture a slice of the world’s fourth-largest car market.
BY RUTH MORRIS
SHANGHAI -- When the Chinese government unveiled its five-year economic plan in March, it told companies to "go out," pushing them to invest and compete in overseas markets. Apparently the Portuguese equivalent translates to something like, "take the car keys."
Two major Chinese carmakers are bringing production plants to Brazil, laying out investment plans in the hundreds of millions to test drive the worlds fourth largest car market. Leading the way, Chery Automobile Co. broke ground on its new industrial park in Jacarei in July-- an investment valued at $400 million. Just weeks later, automaker Jianghuai Automobile Co., known as JAC Motors, confirmed plans to invest $600 million to build a factory of its own.
The Chinese factories will be the first of their kind in Brazil and could help push trade relations between the two countries beyond their current contours; China mostly buys commodities from Brazil, while Brazil mostly buys inexpensive manufactured goods from China.
Both companies plan to use the finished facilities as a platform for exports to other countries in the region.
However, there are several challenges. Yesterday, the Brazil government raised a tax on cars with a high content of imported components – a move that could hit Chinese carmakers’ imports of cars into Brazil and plans to import parts for assembly, Bloomberg reports.