In the slow lane: Inside the Chinese automobile plant operating in Gqeberha

The Beijing Auto Industrial Corporation (BAIC) recently hosted a visit to the plant as it sought to reassure the market that progress was being made. A walkabout revealed a neat, well-equipped but quiet facility with a skeleton staff.

We did not see many of the reported 106 employees, but the company said it expected to be in full swing with more staff once demand ramped up. 

In a move that could help the factory get into top gear, BAIC subsidiary Foton plans to assemble commercial vehicles at the facility from 2026.

The brand, founded in 1958, is one of several Chinese brands sold in SA, but unlike its peers it has vehicle assembly facilities in the country. It markets the B40 SUV and Beijing X55 crossover — the latter being assembled locally.   

It was a ground-breaking development in 2016 when the Industrial Development Corporation (IDC) — the institution that funds industrialisation projects in SA — entered into what was hailed as one of the largest Sino-SA projects. The IDC owns a 35% stake and BAIC the remainder of the R11bn project.

Asked about the delays at BAIC, the IDC said it was in touch with management at the factory and understood its view that production output be linked to market demand. 

The SA government entered into the agreement optimistic that it would create jobs. Projections at the start of the project estimated that 10,000 domestic jobs would be created through the automotive value chain.

Initial plans for the 89,000m² plant in the Coega Special Economic Zone (SEZ) included an assembly line, press shop, paint shop, offices, a body shop and a supplier park next to the factory housing small and medium-sized local component manufacturers to support the full-scale production.

BAIC is confident its R11bn assembly facility at Gqeberha will deliver despite labour disputes and production delays that have caused the plant to operate at a fraction of its capacity.

Since building commenced in 2016, every stated deadline for the plant has been missed, including reaching annual output of 50,000 vehicles by 2022.

BAIC recently hosted a visit to the plant as it sought to reassure the market that progress was being made. A walkabout revealed a neat, well-equipped but quiet facility with a skeleton staff. We did not see many of the reported 106 employees, but the company said it expected to be in full swing with more staff once demand ramped up. 

In a move that could help the factory get into top gear, BAIC subsidiary Foton plans to assemble commercial vehicles at the facility from 2026. 

The SA government entered into the agreement optimistic that it would create jobs. Projections at the start of the project estimated that 10,000 domestic jobs would be created through the automotive value chain.

Initial plans for the 89,000m² plant in the Coega Special Economic Zone (SEZ) included an assembly line, press shop, paint shop, offices, a body shop and a supplier park next to the factory housing small and medium-sized local component manufacturers to support the full-scale production.

As part of the festivities to celebrate the birthday of former president Nelson Mandela, the company opened the plant’s doors to media. 

The plant kicked off production with the now discontinued D20 and X25 models. Its focus now is on the semi-knocked down assembly of the newer Beijing X55 crossover model. The plant is designed to eventually shift into a completely knocked down assembly, differentiating BAIC from imported Chinese brands such as Haval and Chery.

Production has been marred by delays, which BAIC attributes to the Covid-19 pandemic, though the project has also been affected by labour disputes. BAIC also blames a lack of brand awareness for slow sales of its vehicles that have seen it miss a production target of 50,000 cars a year, most of which was aimed at export markets.  

BAIC SA said about 3,000 units of the X55 had rolled out of the factory’s doors.

According to motor industry umbrella body Naamsa, the company sold 119 cars locally in June. The Beijing X55 accounted for 114 of those and the remainder were the B40 Plus, indicating a crisis for the multibillion-rand manufacturing project.