Chinese automakers look to Africa for growth

Under increasing pressure in their domestic market, carmakers are looking further afield for sales

Africa presents a unique opportunity for Chinese carmakers in a number of ways. Economic growth in the region's steady economies, such as Ghana, Nigeria and Kenya, coupled with an increase in infrastructure investment, is naturally leading to greater demand for cars, buses and trucks. However, the fledgling economies are also leaving foreign automakers plenty of scope to shape the way their brands are perceived.

Homegrown marques, such as Beiqi Foton and electric carmaker BYD, have already made inroads into mature African markets including Egypt and South Africa.

In 2013, Beiqi Foton shipped over 20,000 light trucks, vans and pick-ups into Africa, making it China's biggest exporter of vehicles into the region.

The company will also set up 'knockdown' factories later on this year to avoid high import tariffs, a technique already popular with Chinese automakers in developing economies such as Brazil, Poland and Russia.

BYD expects to deliver between 8,000-10,000 vehicles into Egypt this year, which will then be distributed across other countries with whom Egypt enjoys favourable tax relations. Although the carmaker currently only exports its F3 model into the region, it is considering including SUVs into its offering soon.

The emerging continent will leave Chinese automakers plenty of scope to shake the "made in China" stigma, which is often wrongly associated with cheap or poor quality products.

But, Africa remains a "low-price and low-demand market", according to BYD export manage Isbrand Ho, and Chinese offerings are often more 'no-frills' than those in the domestic market. Automakers frequently take out plush trimmings and power windows in an effort to reduce cost.

Sensitive to the laws of supply and demand, Ho believes the key to export success is providing value for money in developing markets, while shipping its eco-friendly electric cars to countries such as the UK, Israel and Poland.