adminlargest vehicle exporter, Chery, shows a radical departure from Zimbabwean conservatism when it comes to business.
The country’s two car assembly plants are both old. They were built in the second half of the Federation of Rhodesia and Nyasaland, the Harare plant for Ford of Britain and the Mutare plant for the
British Motor Corporation, an amalgamation of Austin and Morris that was soon to be absorbed into British Leyland. The plants assembled British-made cars right up to UDI in 1965 but were then forced to switch. The French, Japanese and occasionally a troubled German firm started exporting kits with fake documents.
The Japanese cars were the big switch in attitudes. They started arriving only a few years after the Japanese manufacturers turned away from cheap throw-away products to quality, but most car buyers in the 1960s still had to be persuaded that Japanese cars were not junk.
Obviously a similar change of expectations is now needed with Chery products, which are already exported or assembled in a wide swathe of countries across Asia, Latin America, parts of Africa including South Africa, and Eastern Europe.
The company has already moved into Italy and is planning a major push into the European Union in four years time and is one of the Chinese manufacturers planning an assault on the US markets, so it is not a “junk-car” maker. And the Chery cars are not that cheap. They do cost significantly less than roughly equivalent cars from Europe, Japan and the US, but in global terms Chery is a mid-market maker and even the QQ models cost more than the Japanese imports that continue to flood Zimbabwe.
We need to remember that although the Chinese vehicle market became the largest in the world, overtaking the US market, a couple of months ago, Chinese expectations are rising and since Chinese citizens have to buy their cars for cash they expect a reasonable endurance and good value for money.
So in one respect Chinese cars are a good idea for Zimbabwe; while main Chinese highways are top-quality many of the side roads outside main urban areas can be rough. So what endures there will probably endure here.
But in another sense they will fail to fill the gap at the bottom of the market being fairly sophisticated. In fact Chery and General Motors fought a nasty legal battle in the first half of the 2000s because the American firm thought a Chery design was too close to one of its smaller cars.
So the demand for cheaper second-hand imports is likely to continue unabated for some time, until Zimbabwean middle-income salaries, and just as critically the savings rates of this group, start to match those of their Chinese colleagues. We hope that Quest will press banks to start offering suitable finance packages. The relative sophistication of Chinese cars is why we have in the past pressed Zimbabwean industrialists to look at Indian models, where far cheaper, if far more basic cars, are made.
There is room for the products of both Asian giants in Zimbabwe but probably for different markets. In any case there is no way soon that Zimbabwean assembly plants could totally satisfy local demand, even with the reopening of the Quest plant.
The two were designed to fill the demand of the 1960s, struggled to keep up in the 1970s and were totally overwhelmed in the 1980s before car markets were liberalised in the 1990s. One interesting point when it comes to expansion is that the major Indian exporter, as well as Chery, which while only the seventh largest Chinese maker is its largest exporter, are both keen on joint ventures in assembly plants. This in fact is one reason why Chery has moved to the top of the Chinese export tables and why India’s Tata is now Britain’s largest industrial concern.
We see the Quest-Chery partnership as just the start. Zimbabwe can offer a skilled and educated workforce as well as a good range of established supporting industry.
There is no reason why local industrialists cannot enter into partnerships with the Asian giants and make this country the centre of the Southern African assembly of their cars.
There are a lot of people in this region who have the sort of salaries and the expectations common to the middle-income earners of China and India. With South African dominance of the luxury markets we need products that can compete in the middle markets.
But for a start, and Quest has made this, we need to start filling Zimbabwean demand. As we have noted this will mean Quest getting banks to organise finance, as well as overcoming some resistance to Chinese products arising from the trend to import the lowest quality rather than what the Chinese themselves buy.
Online Reporter