BAIC to transfer unit to Hebei

BAIC Group, China's fifth largest carmaker by sales, will relocate a manufacturing subsidiary to Huanghua in North China's Hebei Province amid calls for enterprises to move their production bases out of Beijing, company chairman Xu Heyi said on Saturday at an industry forum.

"The subsidiary, capable of producing trucks and sedans, will be relocated to Huanghua, while we retain the research and development, key components manufacturing, and high-end manufacturing facilities in Beijing," Xu said in a speech delivered at an auto industry forum.

"Land prices in Beijing have soared and available land plots for investment have decreased, while companies face a growing pressure to buy more land plots as sites for their plants to expand output capacity and meet demand," Zhang Gui, deputy director of the Center for Beijing-Tianjin-Hebei -Development Research at Hebei University of Technology, told the Global Times on Sunday.

BAIC Group first started to plot its relocation plan in 2010, with an array of production sites spreading across northern, southern and southwestern parts of China.

The first phase of the pro-ject in Huanghua, an important plant in BAIC Group's relocation plan, has already been completed in December 2013, capable of producing 200,000 units per year, and the capa-city will be further raised to 400,000 units per year in 2015 after the completion of the se-cond phase, according to the company.

Zhang said such relocation reflects the company's overall strategy.

"Baoding-based Great Wall Motor chose to put their high-end sports utility vehicle plant in Tianjin, to benefit from the vicinity of port facilities. -Huanghua is an important harbor terminal in the Bohai Bay, giving the company a good springboard to tap markets in southern China and overseas," Zhang said.

Though primarily a coal port, Huanghua has seen its turnover for container vessels steadily increasing. The port handled 80,605 containers in the first quarter of 2014, increasing 110.61 percent year-on-year, data from the local harbor authority showed.

However, Xu did not disclose plans concerning tax, one of the most sensitive issues in Beijing companies' relocation plan.

"Tax issues are one of the key concerns for local governments during company relocation as no city wants to suffer a loss in tax income after a company moves out of its jurisdiction," Tian Yu, a research fellow with the China Society of Macroeconomics at the National Development and Reform Commission, told the Global Times Sunday.

China Business News reported on Wednesday that Beijing has drafted a list of 207 enterprises with heavy pollution, huge energy consumption and high emission to be relocated out of the city, and noted that these companies are not really welcomed by cities in Hebei Province.

But the Beijing Municipal Commission of Development and Reform swiftly denied the existence of such a draft on the same day.

The BAIC Group sold 148,467 cars in February 2014, up 10.88 percent from last year, according to statistics on the company's website.

The company sold a record 2.16 million cars in 2013.