Behind the Wheel

By Lu Anqi

In its spacious showroom in Isando， a small town northeast of Johannesburg， the Chinese automaker First Automotive Works （FAW） displays its most popular vehicle models assembled in its Port Elizabeth plant.

“Its called the J5，” Ngoni Chaitwa said pointing at a large white truck. “It can pull a trailer with a load up to 34 tons. We call it Beautiful Africa because it is doing very well in Africa.”

Ngoni Chaitwa， a salesman who has been with the company for three years， said that FAW vehicles are doing very well in the market， mostly because they are reasonably priced， competitive and most importantly， made in South Africa. This makes having access to spare parts and maintenance much easier.

With the deepening of China-Africa cooperation， Chinese automakers have begun setting up factories in Africa in recent years， turning the dream of “Made in Africa for Africa” into a reality.

FAW a pioneer

As a pioneer Chinese automaker， FAWs story with Africa began in the 1970s when its vehicles were used in the construction of the Tanzania-Zambia Railway. “Demand has kept on rising ever since in this area，” said Hao Jianyu， Deputy CEO of FAW South Africa， “We are probably the first Chinese brand to have set foot on the continent.”

According to Hao， FAW started selling and shipping trucks to South Africa in 1994， and 10 years later it established an $80-million assembly plant with an annual producing capacity of 5，000 trucks in the Coega Industrial Development Zone （IDZ）， outside the coastal city of Port Elizabeth in the Eastern Cape.

At that time， the move indicated a deepening commitment to South Africa and Africa in general， from a globally respected and Fortune 500 automotive manufacturing company.

“The launch has proved to be a big step forward in FAWs localization [in Africa]，” said Hao， looking at the progress the company has made in the last decades from selling to manufacturing in Africa. “People know that we invest here and are determined to take roots in Africa， so they have confidence in us.”

“Our market share has witnessed a continuous growth since 2013， despite the weak market demand resulting from the global economic downturn. When the economy slows down， people need good and affordable vehicles more than at any other time，” Hao told ChinAfrica.

In 2015， the Coega plant produced 1，000 vehicles， mainly sold in South Africa， and that number will increase to between 1，200 and 1，300 in 2016.

Hao also attributed the growth to the facts that Chinese automakers have become better known and have continuously sought to improve their products in order to adapt to and meet local needs.

“In the first few years， we encountered many problems，” Hao admitted frankly. “But we have learned to adapt to local needs and we are still learning.”

Hao said FAW South Africa， which has 28 dealers in the country and more than 100 on the continent， is also working on building sales and after-sales networks to expand business and improve service.

BAW localization

If FAWs story shows that localization is a key growth driver， another Chinese automaker， BAWs probably emphasizes that it is crucial to understand local financing systems from the buyers perspective.

Beijing Automobile Works （BAW） South Africa， located in Springs， a small town east of Johannesburg， is a joint venture involving Chinas well-known vehicle manufacturer BAW and South Africas Industrial Development Corp.（IDC）. BAW is a company under the Beijing Automobile Industry Holding Company Group which is ranked 160 on the 2016 Fortune Global 500 list.

Established in 2013 with an initial investment of 196 million rand （$14.7 million）， BAW South Africa focuses on manufacturing the 16-seater Sasuka minibus， whose name means “we are departing” in the local Zulu language.

Minibus taxis are a vital part of South Africas public transport system， as more than 16 million South African commuters depend on them daily. The Sasuka aims at offering a “more affordable， safer and more reliable”transport option to local people. The minibus comes with a 200，000 km service plan and an insurance plan.

However， finding buyers has proven difficult. “Our customers have had some financing problems，” said Zhong Jide， former CEO of BAW South Africa. “In China most people are used to paying in a lump sum. But this is not the case in South Africa， where people are used to taking out loans to buy cars. If our customers cannot secure the loan， they will not be able to buy.”

Apart from finding solutions to address the financial challenges， BAW South Africa is planning to expand by restructuring its plant.

“An additional 220 million rand （$16.5 million） will be invested into restructuring， which is expected to be completed by next July，” said BAW CEO Zhang Wei.

After restructuring， new processes will be added， turning the BAW South Africa plant， currently specializing in general assembling with imported parts from China， into a complete knocked down plant. In general， an auto plant includes four production processes： stamping， welding， coating and general assembling. After restructuring is completed， BAW South Africa will be able to do the last three processes.

“This means addition of technological processes， extension of industrial chain， and creation of jobs，” said Zhang. The plants restructuring and expansion will create another 100 direct jobs and more than 6，000 indirect employment opportunities.

Job provider

The rise of the automobile manufacturing industry has helped turn many previous unemployed and unskilled young South Africans into skillful industrial workers， bringing hope to many more.

FAW South Africa now has a total of 240 workers， of which 98 percent are locals. BAW South Africas work force is made up of approximately 200 workers， with 96 percent of them being South Africans.

In the newly established auto plants， young people receive training and soon become skillful workers.

Errend Magaena used to do maintenance work in a local school before joining BAW South Africa in November 2012 as a maintenance and cleaning employee. He was soon transferred to the production line.

Magaena is now a first-level supervisor in charge of two teams working on the trimming and mechanical lines， making sure everything is running smoothly.

The young man shows his strong desire to grow together with the company. “As for me， I would like to be part of the senior management in the next four or five years. For BAW， where I plan to stay for a long time， I wish it all the best，” he said.

Rose Mothogoane， previously a car-cleaner， is now a team leader responsible for the trimming line at BAW South Africa. “My dream is to see the company growing， hiring a lot of people and having the potential of producing more vehicles，” she said， adding that she hopes to become a supervisor one day.