Taking a rough ride to growth

Lifan Industry (Group) Co, one of the first Chinese automakers to operate in overseas markets, has been one of the early movers in Africa. The company entered the African market in 2007 and has made Ethiopia its main base for the continent.

Most of Lifan's vehicle exports to Africa are in the form of semi-knocked down kits that are later assembled locally. In this process, the company exports major parts of the car such as the engine, chassis, gear box and body separately and then assembles them.

The company plans to move to a knocked-down model of manufacture later, so that they can ship all parts for local assembly plants. Company officials say that this process helps reduce the final costs in Africa, because of the lower customs duties.

By the end of last year, Lifan had moved its assembly lines in Ethiopia to a new location in the China Eastern Park, an industrial park developed by a Chinese private company. The shift helped Lifan raise its vehicle production capacity in Africa to 5,000 vehicles a year from 1,000.

Later this year, the company will add another production line and an inspection line in the new factory. Its most popular brands such as Lifan 520, 530, sports utility vehicles and minivans will all be assembled in Africa.

Lifan, however, is not the only company betting big on Africa. Foton Motor Co Ltd, the largest commercial vehicle manufacturer in China in terms of sales volume, has shipped more than 20,000 vehicles to Africa, including vans, pickups and light trucks. Major sales destinations in Africa include South Africa, Algeria and Egypt. Foton currently exports its vehicles to more than 80 countries and has units in more than 20 countries.

Two years ago, Foton established a company in Kenya with an initial investment of $50 million. When the factory reaches its full capacity, it is expected to make 10,000 cars every year.