Curve to avoid the risk of moving into Russia and Belarus Chery

By Zou

In order to circumvent the policy of the Russian market uncertainty, Chery has made it clear for the Russian market the strategic migration plan - Russia's neighbor Belarus in the assembly and manufacture of motor vehicles, aimed at the assembly in Belarus after the export to Russia.

According to local media reports of Russia, Belarus Chery projects originally planned in April this year, prior to finalizing the project are the main contents of automobile factory in Minsk, Belarus set up stamping, welding and painting lines, the entire process of China's Chery Automobile assembly.

Chery beside the commerce said that Chery has all the groundwork work to do a good job and is awaiting the acceptance of the Government of Belarus, the major commerce are preferential assesses and policies.

In item, because of the high-level alertness to the Government of Belarus, the venture quite indecisive prospects. Moreover, in harmony with the Russia and CIS nations noted a free trade accord, assemble Chery motor vehicles in Belarus, as long as the restricted goods produced of more than 50%, can be exported to Russia.

Russian professional, notified reporters Moscow University Roland, Chery tasks in Belarus with the form the implication of street open when this will not only strike the Russian Chery are a good way, and will have more assortment in the Chinese vehicle charges Russia surrounding the set up assembly plants in the Commonwealth of Independent States.

"Escape" from the Russian

At present, very dejected, and the whole Russian market.

Russian Industry Minister Viktor Khristenko said that Russia in 2009 the entire history of the automobile industry will face on the worst year for car sales is expected to decline more than 60%. The Russian government in December last year when 40 percent expected to decrease. Downturn in the market so that enterprises in the Russian capital the local chain is almost broken and vulnerable. Russian Volga car plant's largest distributor - British克姆拉达Corporation (who) has recently declared bankruptcy.

March 30, Russian Prime Minister Putin of Russia committed to the liberate of four greatest state-owned automobile vegetation assembly, Russian Deputy Prime Minister, pertinent ministers, as well as the four greatest state-owned enterprises and Russia - the Volga, Gorky, Kamaz, Sollers's someone in accuse of all present, the very large and unprecedented scale. Russian Prime Minister Vladimir Putin on Russia's greatest motor vehicle fabricator AvtoVAZ organisation of fabricating financial gatherings and staff that the financial gathering and other divergence is that the Volga automobile fabricating financial gathering did not lay-offs, but this is a highly charge score.

At the gathering on the long before, the Russian government has determined to an added 10 billion rubles of household financial vehicle for government procurement program, tremendous efforts. "Russian localized enterprises tremendous breaches in funding, the Russian Government's aim is very conspicuous, is to support localized enterprises." Rowland notified reporters, "and these businesses are just the Chinese vehicle rivals."

At present, all of the Russian government did not liberate parcel realized, earlier ushered in last year has been arranged for March 24 against the implementation of population pay for 350,000 Russian rubles preferential advances for the following types, up to now has not eventuated .

"In Russia, the policies introduced by the Government within six months do not have to implement it are normal, local government and bank accounts do not buy the deadly problem in Russia, if the preferential loans in June this year can not be carried out, the entire Russian Auto markets will face enormous difficulties. "Roland said.

Russian agencies in harmony with the guess, the earlier two months, year-on-year descent in the Russian automobile use up to 40% after the March sales will decline 50%, in 2009 a diminish in the complete market will arrive at a least 35% -40%.

Not only that, but the indecision of the Russian market still has farther aggravated the commencing of the year commence to realize strategies to finish in September of imported motor vehicles went up tariff guideline has carried on implementation of the prevailing signs. Tariffs on imported motor vehicles is not only a hard bang to Chinese deals of motor vehicles, but in addition the principle intent is to military a large influx of Japanese employed motor vehicles in Russia. Data present that the first two months of this year, the Japanese employed motor vehicles into Russia is virtually stagnant. In augmentation, imported motor vehicles for the more strict protection and ecological benchmarks are brewing, the prevailing public communication is that Russia in 2010 to realize the European IV emission standards.

Russia is a high risk investment market has become an accepted fact, even by the Russian government welcomed the cross-border capital investment in Russia very carefully, especially the Japanese auto companies, for example, after the Toyota-owned factory in Russia only in 100 million U.S. dollars, which the world at large Toyota obvious contrast.

Policy to avert the indecision of Chery are one of the justifications he moved to Belarus, and new partnerships with the Russian co-operation does not productively TagAZ Chery in addition has to face.

Depressed because of market circumstances, the two boundaries did not understand the primary investment. At present, TagAZ sombre subject of funding flexible chain of bonds, as showed by Russian broadcasting descriptions, the vegetation has been was indebted the bank 6.0 billion Russian rubles southwest of the Russian foreign trade bank, as well as 6.5 billion rubles.

Because of currency shortages, the vegetation or even the matching supplier only, seller of "barter", bonds, allocations, apparatus, wares can be employed for settlement. Because of the deficiency of auto elements suppliers, TagAZ commence goods produced in February from the prevailing goods produced has not entirely recovered. Chery and give the method of assembly, TagAZ in addition forcing their own brand label of motor vehicle C-100, this motor vehicle fittings imported from Korea.

Chery insist not to give up the Russian market, with the person as saying "the Board will come out will be very difficult." Last year, Chery terminals in Russia of 1.2 million units sold this year, the same mission in Russia is the lowest bottom line. Chery is currently the focus of the work is firm confidence in the distributor in Russia, and in marketing efforts.

Roland believes that Chery assembled in Russia want to draw the lessons of the project, in the hands of the production control of Belarus. It is understood that the Chery projects in Belarus are of great importance to the Government, Belarus Deputy Prime Minister to personally intervene. "China's car prices have suffered setbacks in Russia, an important reason for this is that did not receive the support of the Russian government, and Toyota, GM and other multinational corporations are just the opposite."

Of course, the fundamental reason is the benefits, Belarus national production has only a few hundreds of passenger vehicles, passenger cars and annual sales reached nearly 25,000, that is to say Chery to enter Belarus would not impact on the formation of local brands, and will be added beneficial.

The development trusts that there is in addition divergent from the Russian government apprehensive to look after the restricted motor vehicle manufacturers, Belarus commenced in 2006 to set up connection endeavour goods produced of Iran's motor vehicle, there should be no in the household motor vehicle financial gatherings are urging to put insist on the Government guidelines often source automobile development adjustment.

Belarus are a very important partner of Russia, which directly involves the political and security of Russia, including Belarus, the CIS countries and Russia have signed a free trade agreement, except for certain commodities, the basic import tariff to zero. Roland said that Chery As for future projects in Belarus, the key depends on the Government of Belarus and the Russian government commitment.

Specific to motor vehicles, Chery familiar with the relevant people in Belarus, told reporters, Chery plant in Belarus is changeable in order to circumvent the policy of the Russian risk, in accordance with the country's two free trade agreements, as long as the local production of Chery in Belarus 50% , you can export the Russian.

From the sales of the first two months of this year, the Chinese motor vehicle was virtually fully completed annihilated in Russia, which in addition embraces one of the expansion in 2008 of the Great Wall and other Chinese motor vehicle costs, from this consideration, Chery is a collection of Belarus was no option but to force, but one time this thoroughfare of Belarus had a depart, will give a many impetus to China's motor vehicle costs instance, in rank to retain the Russian market, Chinese enterprises will be more collection in the assembly and fabricate of the Commonwealth of Independent States. - 21392

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