Posted on 24 Aug 2015
China-based automaker SAIC-GM-Wuling
Automobile (SGMW) Corp. Ltd. has kicked off the construction of a factory in
Indonesia, its first in Southeast Asia, as it seeks to expand its business in
the region.
Located in Bekasi, east of the capital Jakarta, the factory carries a total
investment of US$700 million and will be capable of producing up to 150,000
vehicles a year.
The plant, the construction of which is set to be completed by July 2017, is
part of the company’s global expansion plan. It chose to develop a factory in
Indonesia based on its strategic position as a hub for the Southeast Asian
market, from which it could sell products to neighboring countries, such as
Malaysia, the Philippines, Singapore and Thailand in the future.
“Indonesia has the biggest economy in Southeast Asia. It has potential for the
automotive market,” said Yuan Zhijun, vice president of PT SGMW Motor
Indonesia, the company’s subsidiary in Indonesia.
The company will seek to step up its production in the long run in order to
distribute its products to other Southeast Asian countries.
“The first production will be focused to supply [the] Indonesian market. We
will seek to [export] our cars to neighboring countries afterwards,” PT SGMS
Motor Indonesia’s President Xu Feiyun told reporters on the sidelines of the
factory’s ground-breaking ceremony on Thursday.
Xu said the company would manufacture cars with 50 percent local content and
would plan to increase the local content in the future.
That is in accordance with the aim of the Indonesian government, which wants
carmakers to increase their use of local content in order to benefit the
country.
“The Trade Ministry is ready to bridge the company and local component
industries,” said I Gusti Putu Suryawirawan, the ministry’s director for base
metal industries.
He added that SGMW was currently collaborating with 40 local component
producers.
Meanwhile, Xu cited big challenges in doing business in Indonesia given the
fact that Japanese cars account for around 91 percent of the total automotive
market in Indonesia. He said, however, that he was optimistic the company would
be able to increase its market share as it had 30 years of experience in the
industry.
“At the beginning we may only have a 5 percent share. But [we] will increase it
to 10 or 15 percent as we go. The most important thing is to understand the
market’s appetite,” Xu explained.
In addition, the Investment Coordinating Board (BKPM) said it had made efforts
to convince the Chinese company to enter the Indonesian market since there was
already a perception that the country’s market was dominated by Japanese
products.
“We convinced them that after-sale services were more important than brands,”
said Harri Santoso, the BKPM’s coordinator for investment marketing for China.
SGMW is a joint venture of three companies: SAIC Motor Corp. Ltd, General
Motors and Guangxi Automotive Corporation. It produces mini-commercial vehicles
and multipurpose vehicles (MPV).
The company has exported its products to South America, North Africa and the
Middle East, where they are sold under the General Motors Chevrolet brand.
In 2014, the company sold more than 1.8 million vehicles with a total value of
US$11.92 billion, or a 20.7 percent increase from the same period in the
previous year.
