Chery opens new auto plant in Brazil

Updated: 2014-09-01 03:22

By ZHANG FAN in Sao Paulo(China Daily Latin America)

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Chery opens new auto plant in Brazil

Brazil's Vice-President Michel Temer (second from the right), Chinese Ambassador to Brazil Li Jinzhang (right), Zhou Biren, president of Chery International and vice-president of Chery Automobile (second from left), Peng Jian, president of Chery Brazil (left) and Wang Mingfang, chairman of Anhui Provincial Committee of Chinese People's Political Consultative Conference (third from left) take a photo at the inauguration ceremony of Chery's first car plant in Brazil on Aug 28 in Jacarei, Sao Paulo. [Zhang Fan / China Daily]

Chery Automobile's new factory in Brazil is a vivid example of Chinese industries expanding in the Brazilian market, said Chinese Ambassador to Brazil Li Jinzhang at the factory's inauguration ceremony in Jacarei, Sao Paulo.

"Chery and many other leading Chinese companies are enlarging their investment in Brazil, which shows that Chinese companies are holding high expectations for the future of Brazil's economy and also have confidence in the cooperation between the two countries," Li said on Aug 28.

Li's comments were echoed by Brazilian Vice-President Michel Temer, who praised Chery's factory as an example of China-Brazil cooperation. "Chinese investment has been very cautious, but Chery did not hesitate too much," said Temer. "I believe Chery will bring more Chinese companies to Brazil."

Temer said trade between China and Brazil used to mainly concentrate on agricultural products such as soybeans and corns, but that industry is becoming a more important element in the bilateral economic relations.

Located in Jacarei of Sao Paulo, the new plant is Chery's first outside of China, and includes an automobile factory and an engine factory, with a total investment of $530 million. Construction of the 400,000-square-meter factory started in 2009.

Chery will invest $22.3 million in building a research and development center, and is looking to partner with leading universities and technology centers in Sao Paulo.

When fully operational with a production capacity of 50,000 cars in the first year, Chery's plant is expected to create 3,000 jobs. It will also serve as the headquarters of Chery in Latin America and export cars to neighboring countries such as Uruguay and Paraguay.

"The investment is an important part of our general foreign investment," said Mauro Borges Lemos, Brazil's minister of development, industry and commerce.

Lemos said major improvements are expected soon in Brazil's recovering economy. He said Brazil attaches special attention to the automotive industry and that Chery's local factory represents successful development of the country's automotive policies.

Brazil is the world's fourth-largest automobile market and the sixth-largest auto manufacturer. Major automotive enterprises such as General Motors and Volkswagen have built production plants in Brazil.

To encourage foreign automobile companies to build plants in Brazil, the government enacted a series of policies such as the 30-percent increase in tax on imported cars in 2012. That year Brazil also applied Inovar-Auto, which provides a 30-percent discount in the excise tax for locally produced cars.

Such policies caused international automotive companies to establish production in Brazil, including Chinese companies. BYD Auto, Lifan Industry and JAC Motors are planning to build their first Latin American factories in Brazil. While Chinese automotive companies are increasing their participation in Brazil, car sales in the country are shrinking. Total sales in July were 294,787, a decrease of 13.9 percent compared with that last year.

"I believe such a decrease is only temporary. Brazil's automobile market will continue to grow. It may take some time, but it will finally be realized," said Zhou Biren, president of Chery International and vice-president of Chery Automobile.