Thailand cast in favourable light

Contact info:
Tracy A. Lee

111 NE 11th Street Map
Grand Prairie, TX 75050
Tel: (972) 602-1478
Fax: (972) 660-2845
tlee@firstexind.com

Firstex Industries
has expertise in these areas:

Product Links

News from the Import Industry

July 22, 2009

Thailand cast in favourable light

The country seems a preferable choice for Chinese investment as other Asean nations are too protective of their auto industries

Thailand figures favourably in Chery Automobile's plan to expand and diversify into Asean markets, according to Tony Sun, assistant president of Chery International, its overseas investment arm.

Established 12 years ago Chery Automobile is a state-owned enterprise with Wuhu, a prefecture-level city in Anhui province, the majority shareholder.

In making decisions pertaining to future diversification and investment in Asean, Sun affirmed, Chery will accord priority to countries with which it already has a "strong" partnership.

Last year Chery got Thai conglomerates - Charoen Pokphand (CP) and Thai Yarnyon - to form an import/distribution company called Thai Chery Yarnyon responsible for all Chery products marketed in Thailand.

The company's first outing at the Bangkok International Motor Show last March saw it introduce three models of Chery, boasting prices competitive to what others makers of similar cars were offering, and trying to overcome any lingering doubts consumers in Thailand may have had about the quality of Chinese-made products.

Zhou Biren, vice president and director of the Chery board, said any investment will be a long-term plan, calling for the establishment of manufacturing facilities with an annual production capacity of 50,000 cars, catering to Asean markets.

He recognised the merit of setting up Chery's own production facilities in an Asean country, and the need to produce automobiles using at least 40% local content in order to enjoy tax privileges accorded under Afta, the Asean Free Trade Area.

Zhou estimated that the establishment of such facilities would require at least US$100 million, excluding land costs, and he and his team needed to thoroughly study the feasibility before they could come up with actual investment figures.

For an undertaking of such magnitude to be feasible, Zhou said, the annual sales volume must at least be 30,000 units, before construction of facilities could begin.

Chery has not yet invested in production facilities in Asean, but it is already outsourcing manufacturing of some car parts to Malaysia and Indonesia to avoid high import duties.

But of all the possible investment destinations in Asean, Thailand seems the more preferable choice, because other governments in the region are very protective of their automobile industries, according to Zhou. But he was non-committal when asked if it would be Thailand, only saying any decision to invest on such a massive scale depends on several factors. Chery will invest in a location where enabling factors allow the company to recoup its investment in the shortest possible time.

The main criteria would be sufficient sales volume, production costs, sufficient supply of raw materials, strong partners and support from the local government, said Zhou.

Sun, meanwhile, said there was no rush to invest. Before setting up Chery's own production facilities in Thailand, the company first needed to be familiar with the needs of Thai customers. Noting the Thai market, already dominated by Japanese and Korean makers, was a challenging one for Chery, he said, it will take at least five years to fully understand the taste and preferences of Thai car buyers before it could reach any decision.

Thai Yarnyon, for its part, plans to go ahead with the establishment of a small facility for Chery cars in Thailand.

Thai Chery Yarnyon's managing director Damrong Damrongkulwat said that once annual sales of Chery cars reach 5,000 units, it was likely that his company would push for the establishment of a Chery production facility Thailand, possibly on the Eastern Seaboard.

"Investment in a production facility would be worthwhile if we can produce and sell about 5,000 units per model per year," said Damrong.

He envisions Thai sales of the Chery, for which 180 orders were placed for the three models unveiled at the motor show last March, to reach 5,000 units over the next three years.

Thai Yarnyon's group president Vithit Leenutaphong earlier this year announced a plan to spend 200 million baht to prepare for Chery production in Thailand.

The group's subsidiary, YMC Assembly located in Lat Krabang district, currently serves as a facility for checking the spec and quality control for three Chery models, the QQ compact car, the five-seater Tiggo sport-utility vehicle and the seven-seater Cross multi-purpose vehicle.

Apart from the three models, Chery and Thai Chery Yarnyon have agreed to bring to Thailand at least two more models next year, the A3 sedan and the small luxurious hatchback Riich M1.

Zhou believes flexible fuel vehicles have a future in the Thai market. Chery, that exports cars and related products to more than 70 countries, will roll out the Tiggo SUV as a flex-fuel vehicle in Brazil this month, and shortly afterwards in Thailand.

Apart from flex-fuel vehicles, Chery is exploring the feasibility of exporting its electrical vehicles to Thailand as well.

As a new brand, Damrong said, his company is trying to raise the Chery's profile in the Thai market through innovative marketing, and at roadshows, where the public is welcome to touch and feel its cars and draw their own conclusions about the brand.

Writer: SUJINTANA HEMTASILPA WUHU, CHINA
Published: 10/07/2009 at 12:00 AM

source: http://www.bangkokpost.com/

[ Back to top ]

Firstex Industries

Site menu:

Product Links

News from the Import Industry