Chinese car makers have been investing overseas to expand their market share. One of these is the SGMW. In today's report in our series 'Inside Indonesia', CCTV's Liu Yang takes us to a car manufacturing plant being built near the Indonesian capital, Jakarta.
This is Indonesia, one of the fastest growing economies in Southeast Asia. As one of the beneficiaries of the 21st Maritime Silk Road, proposed by Chinese President Xi Jinping in 2013, Indonesia has attracted many investors' attention, including one of China's major automakers – SGMW.
SGMW is a joint venture between SAIC Motors, Liuzhou Wuling and General Motors. SGMW sold more than two million vehicles last year, including exports.
It's now investing 7 billion U.S. dollars in Indonesia, building its first overseas manufacturing base. The plant will produce Wuling products, including 7-seater multi-purpose vehicles.
The manufacturing base here will produce several SGMW vehicle models, aiming to meeting growing customer demands from in Indonesia market. The vehicle will be sold primarily in Indonesia, with the potential to export to other ASEAN market in the future.
The president of the company, Xu Feiyun, says one challenge has been the slow construction of the plant caused by the rainy season. Another was building a vehicle that attracts local customers.
"First, the quality, style, configuration of our vehicle caters to the requirements of the Indonesian market. We research and develop products based on Indonesian customers' needs. We need to stick to a low cost policy, but that does not mean we sell cheap. It means combining the quality of the products with a lower price. We also need to differentiate our products from other companies," Xu said.
Entering the Indonesian auto market is easier said than done. According to an APEC list in 2013, Japanese brands accounted for over 94 percent of the market share. The other six percent of the Indonesian market was shared between U.S. and European korean brands like Chevrolet, Ford, Hyundai and Mercedes Benz.
"This time we have brought the entire supply chain to Indonesia, to develop the market and set up a service network. The Japanese brands entered Indonesia at an early stage. They have a high market share. We need to figure out how to break into the market here. I think it's very important to be market oriented and customer oriented," Xu said.
SGMW plans to launch a multi-purpose vehicle for the Indonesian market in the 3rd quarter of 2017, aiming to produce 150 thousand vehicles per year. Fifty percent of the staff is hired locally. They're positive about their product.
"Even though in Indonesia, we still can call it is a Japanese car market, still big here, but I think we have chance to beat Japanese car, I think the quality of the car can compete with Japanese car, and also we are planning how to build the dealership here, and how to approach the customer, I will be strongly recommend the car to my family and friend and my colleague," Tri Iswanjono with PT. SGMW Motor Indonesia said.
"I think we will have more choice, right now only Japanese car and brands from the U.S. and EU, so we will have more choices," Galih Anggoro, engerneer of PT. SGMW Motor Indonesia said.
Building the factory has brought benefits to Indonesia, including tax revenues and jobs. As the 21st Maritime Silk Road continues to bring in benefits to ASEAN countries and their people, more investment and cooperation can be expected in the near future.
