BRI and Changan’s Unique Schemes of FDIs
The Chinese Belt & Road Initiative (BRI) has entered into its tenth year, making a new history of world class infrastructure development, regional connectivity, integrated transport, economic and sea corridors in the member countries.
It adopted holistic and comprehensive models and modules of foreign direct investment (FDI) to finance numerous mega projects in the member countries around the globe. In this regard, Chongqing Changan Automobile Co has played an important role in introducing a new modern and smart automobile to facilitate the BRI countries in terms of sustainable development in the automobile sector.
According to the Chinese official data (December 2022) BRI investment in 2022 was unusually dominated by private sector enterprises, including CATL, Alibaba and Changan Automobile Co while construction contracts were dominated by state-owned enterprises (SOEs).
In this connection, potential future engagements can be expected in five project types: manufacturing in new technologies (e.g., batteries), trade-enabling infrastructure (including pipelines, roads), ICT (e.g., data centres), resource-backed deals (e.g., mining, oil, gas), high visibility or strategic projects (e.g., railway). Hopefully, Changan has a unique plan of further FDIs in the member countries of the BRI to provide smart and green vehicles in the days to come.
Moreover, Chinese engagement through financial investment and contractual cooperation for 2022 in the 150 countries of the BRI was more than USD 69.8 billion based on over 200 deals. Cumulative BRI engagement since the announcement of the BRI in 2013 is USD 962 billion, about USD 573 in construction contracts and USD 389 in non-financial investment in which even Changan substantial FDI played an important role.
Moreover, transport-related engagement is an important actor to provide the means to trade between China and the BRI countries. Accordingly, China has invested in and constructed projects in road, rail, aviation, shipping and logistics across the world.
In the two years, Chinese Changan Auto manufacturer collaborated with Pakistan Master Motor Corporation to establish a plant in Karachi with an initial capacity of 30,000 vehicles a year and thus established a world class supply chain of modern automobiles in the country which is the one of the biggest beneficiaries of the BRI.
China’s BRI continues to play a pivotal role in the auto industry by facilitating collaboration and investment opportunities among auto-related stakeholders and markets participating in the BRI. There has been an increase in autos-related investment due to the creation of new BRI partnerships (Indonesia, Democratic Republic of Congo, Pakistan and Argentina).
It seems that electric vehicle (EV) manufacturers and mining companies from China heavily invested in BRI countries and established a durable EV supply chain, as highlighted by strong growth in investment in Argentina and Chile for lithium, Indonesia for nickel and Mozambique for graphite.
South East Asia has also become a key region for China-based automakers selling petrol and diesel cars to expand their market share, as demand for these vehicles slows in the domestic market. This is evidenced by the growth in auto manufacturing investment and auto parts and components’ exports to the region in which Changan has the lion share.
Chinese automaker Changan Auto will invest $285 million in a facility in Thailand to produce 100,000 electric vehicles annually, according to the country’s Board of Investment (BOI). The Co aims to market EVs in Thailand, Southeast Asia and Australia.
Changan Automobile, a leading Chinese car manufacturer, has recently announced it will invest 9.8 billion baht (US$ 285 million) in Thailand, to set up its first right-hand drive electric vehicle (EV) production base outside China.
Critical analysis reveals that Changan Automobile is one of the leaders in EV and intelligent driving technology, with its headquarters and main production base located in Chongqing, China. The Co is China’s fourth-largest automaker, with sales of over 2 million vehicles last year. It also has a joint investment with Ford and Mazda to produce cars in China.
Moreover, Changan Automobile Group, China’s fourth-biggest automaker by sales volume, will invest 30 billion Yuan ($4.7 billion) in research and development (R&D) over the next five years. The manufacturer, which counts Chongqing Changan Automobile Co Ltd among its listed subsidiaries, has spent 5 percent of annual revenue from 2016 to 2020 for R&D.
Interestingly, Changan is on a mission to build the vehicles that people want and need. By producing efficient, safe, stylish and affordable cars, Changan has earned the business of many satisfied customers, and the admiration of many happy employees in the BRI member countries around the globe. It is even a popular brand in Uzbekistan and Azerbaijan.
According to latest figures (December 2022) Changan Automobile Co increased its sales volume in 2022 by 4.9 percent year-over-year (y/y) to 2,053,000. Now it is planning to launch 12 brand-new models under three marquees of Changan, Deepal as well as Avatar, a premium brand co-built by Changan in partnership with Huawei and CATL.
Most recently, it unveiled the hybrid technology IDD, which stands for intelligent dual drive, and three new hybrid models. By 2025, the group’s sales will reach 4 million vehicles a year. It is hoped that sales of Changan-branded vehicles will reach 3 million units and NEVs will account for 35 percent.
To conclude, Chongqing, already the size of the Bangladesh economy, has succeeded to double its digital economy to $156 billion by 2022 driving 60 percent of GDP growth. 70,000 5G base stations by 2022 while then more than double to 150,000 by 2025 would be a great achievement. The role of Changan in the GDP of Chongqing is substantial which is a good omen for automobile development.
Changan has become an icon of style and smartness, precision and productivity, connectivity and compassion, customers’ first choice and affordability, substitute and sensitivity, innovation and integrity, technology and tenderness and alternativeness and accommodation. Thus the future belongs to Changan.
Moreover, Changan Automobile Co has completely transformed the concept of cheap, smart and modern EVs vehicles in the BRI countries. Thus its role in terms of FDIs in the automobile sector in the BRI countries is on the rise which is good omen for the investors and consumers alike.
