Carmaker may head to Saudi Arabia

A visitor tests a new energy car at the production base of BYD Co Ltd in Huizhou, Guangdong province. The Chinese battery and carmaker is vehicle manufacturing facility in Saudi Arabia. Zhu Xingxin / China Daily

BYD Co exploring ways to set up shops in Middle Eastern markets

Chinese battery and car maker BYD Co Ltd is planning to set up a vehicle manufacturing facility in Saudi Arabia, to further accelerate its international expansion.

Ibrahim Qahtan, BYD's director in charge of Middle East market, said in a recent interaction that the Warren Buffett-backed company is exploring the possibility of having an assembly plant in the country, to provide vehicles and spare parts for the local market.

Once the local charging infrastructure is ready, BYD also plans to export its electric vehicles to Saudi Arabia. However, further details and the actual timetable are yet to be finalized, he said.

The Saudi Arabia plan is the latest overseas expansion move made by the Shenzhen-based company, after Senior Vice-President Li Ke announced earlier this year that it would invest $100 million for a factory to produce 4,000 electric buses a year in Brazil. The factory, to be located near Sao Paulo and fully operational by 2016, will also provide products to surrounding markets and Latin America.

BYD was the first Chinese automaker to set up an electric bus plant in California last year, with an initial investment of $30 million. The company has already started to manufacture vehicles in Iraq, Egypt, Ethiopia and Sudan.

In May, China's homegrown Great Wall Motor Co Ltd said it plans to invest 3.2 billion yuan ($510 million) for a car manufacturing plant in Russia, its largest export destination. Located south of Moscow, the factory is expected to produce up to 150,000 vehicles every year.

In April, Great Wall said it was considering expanding production to Malaysia to further stabilize its foothold in Southeast Asia.

Wei Jianjun, chairman of Great Wall, said earlier that the company plans to increase annual sales to 1.3 million units by 2015, with a quarter coming from overseas markets, representing more than 300,000 units.

Analysts said that "going abroad" is a must for Chinese automakers, especially for long-term development, as domestic brands are being seriously challenged by foreign rivals in their home market.

Moreover, it is time for homegrown brands to change their going global strategy to local production, instead of exports, they said.

Statistics from the China Association of Automobile Manufacturers show that Chinese homegrown auto brands' combined market share has declined for eight consecutive months as of May, and the declining trend is expected to continue in the near future as well.

"For automakers, globalization should include the whole industry chain, from research, development, manufacture and marketing to after-sales services," said Wang Liusheng, an auto analyst with China Merchants Securities Co Ltd. "Chinese automakers have started to realize this and expand their international foothold with production plants based on exports for a certain period."

Light truck maker JAC Motor has since 2001 set up 13 assembly plants outside China, while Chery Automobile Co Ltd now locally produces products with 16 factories in 15 countries.

"Localized production can also help Chinese automakers get closer to the market and provide better after-sales services, improved customer satisfaction and a better brand image," said Cui Dongshu, deputy secretary-general of China Passenger Car Association.