Great Wall Motor and its Russian partner have decided to dissolve their joint venture because of recent protectionist measures in Russia.
“We decided to change our way of investment in Russia in order to lower the risks to our investors,” said deputy general manager Bai Xuefei, quoted in the South China Morning Post.
“In terms of appearance and brands, Russian carmakers are still weaker than other global carmakers, and Chinese carmakers are a strong competitor in the [Russian] market.”
The joint venture, Great Wall Alabuga Motor Open Joint Stock, planned to build a plant to make Great Wall Motor vehicles after signing an agreement in 2005.
“But the long-awaited tax concessions by the Russian government in the special economic zone have not been approved. We couldn’t start production,” Mr Bai said.
The joint venture is regarded as a subsidiary of Great Wall, which held 75 per cent. The Tatarstan Property Authority owns the remainder, the report said.
“Having considered the prevailing macroeconomic situation in the world the company and the Tatarstan Property Authority have resolved to dissolve the joint venture,” the firm said in a statement to the Hong Kong exchange yesterday.
“We’ll not build manufacturing plants in Russia any more,” Mr Bai said. “But we’ll look for Russian partners to assemble our vehicles for distribution. The vehicles will be sold in Russia and exported to other [eastern] European regions.”
Great Wall expects to double sales in Russia to 20,000 vehicles this year.
The Russian car market is seen by Chinese OEMs as offering them a good opportunity to master export, distribution and customer service issues in a market that includes a value-driven element and is less regulatory strict than developed markets such as the EU.