Great Wall Motor plans to open Russia factory

Cars made by Great Wall Motor Co Ltd are presented at an international expo in Moscow. The privately owned Chinese company plans to invest 3.2 billion yuan ($510 million) in building a car manufacturing plant in Russia, its largest export destination. Lu Jinbo / Xinhua

Facing fierce competition from foreign rivals, China's privately owned Great Wall Motor Co Ltd plans to invest 3.2 billion yuan ($510 million) in building a car manufacturing plant in Russia, its largest export destination.

According to Great Wall's statement filed with the Shanghai Stock Exchange on Monday, the company based in Baoding, Hebei province, will sign an agreement with the government of Tula Oblast, and the Tula Oblast Public-Private Partnership Development Group for a wholly owned subsidiary plant in the oblast, an administrative district about 200 kilometers south of Moscow.

The factory is expected to produce up to 150,000 vehicles a year. An initial investment of 2.1 billion yuan ($337 million) will be used for the first phase of the factory. The company said a second phase will be depend on the commercial success of the project.

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Great Wall's shares increased by 0.79 percent to close at 26.90 yuan apiece on the Shanghai Stock Exchange on Tuesday.

Company statistics showed that Russia was Great Wall's largest market outside China, and that in 2013, the company's revenue was 1.65 billion yuan in Russia, accounting for 34.39 percent of the total overseas revenue of 4.79 billion yuan.

But Great Wall's total export of 74,900 units last year - 31,500 pickups, 32,400 SUVs and 11,000 cars - was 21.52 percent lower than the numbers in 2012.

In comparison, the company's sales in its home market were 754,000 units, jumping 21 percent on an annual basis. The revenue in the domestic market also surged almost 40 percent to 51.94 billion yuan.

Wei Jianjun, chairman of Great Wall, said earlier that the company plans to increase annual sales to 1.3 million units by 2015, with a quarter in overseas markets, representing more than 300,000 units.

It is a high hurdle to surmount, as in 2013, the company's sales outside China were only 8.48 percent of total sales.

With exports beginning as far back as 1998, Great Wall has brought its products, mostly pickups and SUVs, to more than 20 countries in five continents. It has established knocked down assembly plants in more than 10 countries, including Russia, Iran, Egypt, Ecuador and the Philippines.

In April, Great Wall said it plans to expand production into Malaysia to further stabilize its foothold in Southeast Asia.

Domestic brands have seen their combined market share decline for the consecutive seventh month in April, according to the China Association of Automobile Manufacturers.

The association said the declining trend is forecast to continue in the near future.