Chinese automotive manufacturer First Automotive Works (FAW), recently launched its R600m assembly plant in Zone 2 of the Coega Development Corporation’s (CDC) Industrial Development Zone (IDZ.) The plant was opened by South African President Jacob Zuma.

FAW’s decision to build the plant in South Africa is significant as it is one of the biggest manufacturing investments by a Chinese entity in the country to date, with tangible spin-offs.

It is the result of a presidential visit to China in 2007 led by President Jacob Zuma and was brought to fruition by the unfailing support of various departments of the South African government such as the Department of Trade and Industry, National Treasury, International Relations and Cooperation and many others.

Speaking at the opening of the facility in Nelson Mandela Bay, President Zuma said, “The investment of R600m into the economy will create much needed jobs and promote an improvement in the lives of many people in this area.

“This investment also augurs well for South Africa’s position within the global automotive manufacturing network and proves once again that we have an attractive operating environment to host global multinational companies.”

In particular, it has created Chinese investor confidence in South Africa, inspiring further Chinese investments in the country. Chinese manufacturers Powerway Engineering (R127m) and Powerway Photo Voltaic (R666.6m) have confirmed their investments in the IDZ and will commence operations very soon, bringing the total sum of Chinese investment in the IDZ to R1.394bn.

Yusheng Zhang, CEO of FAW Vehicle Manufacturers SA (PTY) LTD said the decision in 2012 to construct the local FAW plant, was not taken lightly.

Other African countries were considered for the new location however South Africa’s infrastructure development was highly attractive.

“We could have gone to Kenya, or Tanzania where FAW has been present in sales and service for over 30 years – but in the end we chose South Africa because of the infrastructure. It then came down to a choice between East London and Coega.” In the end Coega was chosen because, according to Zhang “the infrastructure is perfect”. Phase one of the FAW project is expected to produce 5 000 trucks annually and 280 jobs will be created during the truck assembling plant’s operational phase.

CDC head of marketing and communications Dr Ayanda Vilakazi hailed FAW’s investment as a major coup for the Eastern Cape, Nelson Mandela Bay and the CDC.

“We are pleased that FAW are supporting the sustainable socio-economic future of the Eastern Cape and that it will be joining the Eastern Cape’s automotive manufacturing community which includes GMSA, Volkswagen, Mercedes-Benz and Ford.

“Although FAW has been present in South Africa for just over 20 years, this first phase investment in the Coega IDZ is indicative of a deepening commitment to South Africa and the African continent from a globally respected automotive manufacturing and Fortune 500 company.”

A possible second phase of the project, which will see an additional investment from FAW, is expected to produce an additional 30,000 light commercial and passenger vehicles annually.

“The FAW investment is of strategic importance to the economy of Nelson Mandela Bay and the greater Eastern Cape region in terms of generating Foreign Direct Investment (FDI) that in turn will create sustainable jobs and provide opportunities for skills development and training.

“We are extremely grateful to all the stakeholders who collaborated with the FAW leadership in the last few months – including commerce and industry in the Eastern Cape, the South African Government and the Chinese government, and the Coega project team,” Dr Vilakazi said.

Vilakazi further stated that Coega continuous to be a leader in the economic development and social upliftment of individuals and communities and most recently it made investment history signing 10 clients at an investment value of just over R1.8bn in the 2013/14 financial year; and became the first state-owned enterprise to achieve a Broad-Based Black Economic Empowerment (B-BBEE) Level 1 Contribution Status – the highest BEE achievable status.

“Coega continues to play a critical and meaningful role in the South African and local economy. We contribute 5% to the local economy in GDP, while on a national scale, we are responsible of 0,1% of South Africa’s GDP.”

The CDC has delivered on its mandate to provide socio-economic development for the Eastern Cape, it has enabled the creation of over 51,000 jobs since inception, there are now 24 operational investors and the CDC boasts an investment portfolio in excess of R151bn. The CDC has also trained 67,945 people since inception.