Iran used to be an important transportation hub and trade center of the old Silk Road. Centuries have passed, and Iran has still retained its position on Asia-European trade routes. Yang Xiaowei visited Iran's second-largest auto maker, and checks out the cooperation bwtween China and Iran on car making industry.
Auto making is considered the industry with the biggest potential in Iran, and the production value accounts for about 10% of GDP. According to data from the international organization of motor vehicle manufacturers, Iran produced 1.1 million cars in 2014, a 46% increase over the previous year. Due to economic sanctions and high tariffs, the development of the industry has suffered constraints.
Facing such a booming market, many foreign companies have been preparing for a long time. Chinese automakers entered Iran back in 2002 and have gained their footholds. The largest cooperation project in recent years came from China's brilliance and Iran's Saipa Group.
"Iran is an important platform in the Middle East for the brilliance group. We follow the practice of "first trade, then invest" in overseas markets. We have developed trade with Saipa Group for many years. The transition to investment started in 2013. It took less than two years on the construction of the production lines," Qi Yumin, chairman of Brilliance China Automotive Holdings Ltd., said.
Saipa Group is Iran's second-largest auto maker and shares 90% of the local market with another giant IKCO. The two production lines were put into use in May this year. Brilliance provides parts and technical support while Saipa undertakes assembly.
Brilliance takes inspiration on BMW's design elements which have better performance and are more cost-effective. The Saipa group is responsible for the selling and maintenance. The after-sales service of Saipa is famous, so this car in Iran is very popular.
This type of cooperation is also conducive to technological upgrading and local economic development. It's just as good for consumers. Chinese sedans have won a good reputation by virtue of its cost performance. Iran is also working on new incentives to encourage foreign capital into auto manufacturing.
"Iran and its neighboring countries have great demand for cars. Our government has required localized production. So we work with Brilliance not only for the two production lines. We also need localized tools production rather than relying on imported tools. I hope Brilliance invests directly in local factories. We also hope to expand into the Middle East market," Ramin Manafi, project manager of Saipa, said.
The "Belt and Road" provides an open platform for all kinds of participants along the route. Spearheaded by Saipa Cooperation, Iranian companies have taken the first step. They are full of confidence towards future and believe they can get even more from the initiative.
