BAIC to start Joint Venture in Russia
Published on January 3, 2012 by Tycho de Feijter
For the first time since international crisis, China and Russia will be working together in a joint-venture automobile manufacturing unit. Russia’s AMS Group located in Ulyanovsk and Beijing Automotive Industry Corporation Group (BAIC Group) will become partners in the joint venture named as the BAW-RUS Automotive Co. Limited.
This new joint venture involves a total investment of USD 176 million along with registered capital of USD 20 million. The company is planning to produce commercial vehicles that will be sold as a BAW brand in Russia. At present, Russia’s annual sales are touching 1.9 million units. As per analysts, the automobile sales in Russia will surpass that of Germany in the next 4 years and is expected to reach 3 million units.
With growth prospects in sight, Chinese automobile industry would try to expand their market share in Russia that has drastically been affected since the international financial crisis. The Chinese auto manufacturers would look forward to tap the Russian market by offering tour vehicles, passenger cars and SUV.
Xu Heyi, Chairman of the Board of BAIC Group commented, “From products export, to technology export, and to capital export, this is the inevitable course for China’s automobile industry to go abroad.”
With the joint venture set up at Ulyanovsk, the partners will surely gain success as the place is an important automobile production base, having a network of 94 dealers. The company will also benefit from policies initiated by the Russian Government to encourage foreign car manufacturers to set up production facilities in the country.
About the venture, Xu Heyi commented, “Previously, export of Chinese automobiles sought mainly to increase sales. Now, however, China’s auto industry intends to explore overseas markets extensively and improve its brand. The positioning of establishing factories overseas will gradually evolve from simple assembling workshops to production bases, and to sales and brand promotion centres. Our joint venture will build a favourable image of Chinese auto brands in Russia”