Lifan sees Africa as gateway to world(2)

Jia Xinguang, an auto analyst in Beijing, said it is difficult for Chinese car companies to break into developed economies because the auto industries there tend to be developed and mature, and emerging markets such as Africa offer many opportunities for Chinese automakers, "because customers there are not loyal to Western brands".

Most well-known foreign cars sold in Africa have been second-hand ones, because Europe and the US have not given much attention to the market, which offers a great platform for Lifan to develop its automobile industry there.

"Lifan has overtaken Toyota as the biggest in new-car sales in Addis Ababa, the capital of Ethiopia, and you can see our cars everywhere in that city," Yin said.

The sound development of Sino-African relations offers great opportunities for Chinese companies to develop businesses in the region, he said.

Although Lifan started its business with motorcycles, it is investing its greatest efforts in developing the car industry, he says, since it realized that making cars is more profitable, with automobiles costing typically more than 15 times as much as a motorcycle. "We want to transform ourselves into a large car maker, along the lines of Honda of Japan and BMW of Germany."

The group got product permission from the National Development and Reform Commission in 2005 to make cars and in January 2006 produced its first sedan, the Lifan 520.

Last year Lifan's car division accounted for about 53 percent of sales. The company expects that by 2020, revenue from cars will be close to 80 percent of the total, Yin said.

Despite his confidence in Lifan's African expansion, he said some challenges lie ahead.

Lifan's development in Africa is constrained by the continent's underdeveloped industry of vehicle components industry. And some African countries also suffer from political turbulence, which poses challenges for employee safety.

Yet Lifan's biggest challenge in its Africa expansion will be to improve its research and development, Yin said.

"To maintain sustainable development and become the real market leader in that region, it is crucial for the group to develop its own core technologies," Yin said.

Lifan owns more than 6,482 patents and says it spends about 5 percent of its revenue on R&D. The company has also set up R&D centers in Chongqing and Brazil, making it the first private car company to have a national R&D center in Brazil.

"We are also looking at the possibility of having another R&D center, probably in Europe, by 2015," Yin said.

Lifan has taken many steps to establish its presence in Africa. Most of its strategies are centered on localization, including local hiring and production. In Africa, most of the company's products are made from heat-resistant materials to combat the hot weather, Yin said.

He said more opportunities lie ahead for Lifan to explore in Africa besides developing the export business.

"We are now considering developing our import business, such as importing Ethiopian coffee and selling it to the rest of the world."

Yin has a global vision for his company that is not that far removed from that of his hero Henry Ford, who worked until he was 85. And with Ford's business longevity in mind, Yin reckons he can look forward to at least 15 more years as Lifan's head. "I am still in the prime of my career."

It seems, too, that as part of that ambition and staying power, Africa looms large.

"Our private companies never lack courage, and Africa offers a great basis on which to build our dream."