July 2014 will be remembered as a momentous month in the history of Chinese automotive manufacturer First Automotive Works (FAW) for it was in this month that the company officially launched its R600-million assembly plant in Zone 2 of the Coega Development Corporation’s (CDC) Industrial Development Zone (IDZ). The plant was opened by South African President Jacob Zuma.
FAW’s decision to build the plant in South Africa is significant as it is one of the biggest manufacturing investments by a Chinese entity in the country to date. It is the result of a presidential visit to China in 2007 led by President Jacob Zuma and was brought to fruition by the support of various departments of the South African government such as the Department of Trade and Industry, National Treasury, International Relations and Cooperation and many others.
Speaking at the opening of the facility in Nelson Mandela Bay, President Zuma said: “The investment of R600-million into the economy will create much needed jobs and promote an improvement in the lives of many people in this area. This investment also augurs well for South Africa’s position within the global automotive manufacturing network and proves once again that we have an attractive operating environment to host global multinational companies.”
In particular, it has created Chinese investor confidence in South Africa, inspiring further Chinese investments in the country. Chinese manufacturers Powerway Engineering (R127-million) and Powerway Photo Voltaic (R666.6-million) have confirmed their investments in the IDZ and will commence operations very soon, bringing the total sum of Chinese investment in the IDZ to R1.394 billion.
Yusheng Zhang, CEO of FAW Vehicle Manufacturers SA (Pty) Ltd, said the decision in 2012 to construct the local FAW plant, was not taken lightly. Other African countries were considered for the new location but South Africa’s infrastructure development was highly attractive.
“We could have gone to Kenya, or Tanzania where FAW has been present in sales and service for over 30 years but in the end we chose South Africa because of the infrastructure. It then came down to a choice between East London and Coega.”
Coega was eventually chosen because, according to Zhang “the infrastructure is perfect”. Phase one of the FAW project is expected to produce 5 000 trucks annually and 280 jobs will be created during the truck assembling plant’s operational phase.
CDC head of marketing and communications, Dr Ayanda Vilakazi, hailed FAW’s investment as a major coup for the Eastern Cape, Nelson Mandela Bay and the CDC.
“We are pleased that FAW is supporting the sustainable socio-economic future of the Eastern Cape and that it will be joining the Eastern Cape’s automotive manufacturing community which includes GMSA, Volkswagen, Mercedes-Benz and Ford.
“Although FAW has been present in South Africa for just over 20 years, this first phase investment in the Coega IDZ is indicative of a deepening commitment to South Africa and the African continent from a globally respected automotive manufacturing and Fortune 500 company.”
A possible second phase of the project, which will see an additional investment from FAW, is expected to produce an additional 30 000 light commercial and passenger vehicles annually.