14 December 2009

Ethiopia: Yangfan Motors Joins Ranks of Local Auto Assemblers

The three automobiles of Yangfan Motors, two of which are new to the Ethiopian market were displayed at the lavishly decorated Lalibela Salon of the luxurious Sheraton Addis. Guests of honour including state Tadesse Haile , minister of Trade and Industry, and Gu Xiaojie , Chinese ambassador to Ethiopia.

Yangfan Motors Plc, registered in Ethiopia by Lifan Motors, the Chinese auto manufacturer, has unveiled its new model automobiles during the launching ceremony held on Tuesday, December 9, 2009, at the Sheraton Addis.

Yangfan has become the fourth car assembling plant in Ethiopia, all of which benefit from tax and duty incentives. The others are Holland Car Plc, BH Trading and Manufacturing Plc, and Belayab Enterprise.

The three Yangfan models, whose parts are supplied by Lifan, are LIFAN 320, 520 and 620. The 520 being produced by Holland Car Plc was using parts supplied by the Chinese company until the two companies ended their relations in June 2009.

The disagreements were over the amount of shares Lifan wanted to buy from Holland Car, which was established by Ethiopian and Dutch investors. It was described that the three models go 15km, 18km and 20km per litre. Their prices are 179,800 Br, 189,800 Br and 219,000 Br.

The benefits from foreign companies investing in Ethiopia to open assembly plants were discounted by a senior government official, who spoke on condition of anonymity.

The value-added factor of these companies would not be more than five per cent, he said. He did not think they deserved as much incentive as those companies who use local resources for up to 30pc of their inputs, interms of value adding.

Another concern, according to this official, would be the amount of foreign currency that would be lost if or when these companies opened letters of credit and repatriated their profits.

"The benefit of technology transfer is also minimal, as these companies produced to little locally," he argued.

State Minister of Trade and Industry (MoTI) Tadesse Haile, who was the guest of honour at the launching ceremony, disagreed strongly with this official.

"Even if the value adding factor of such a company would have is too small, we want to encourage them because we believe this is the first step towards building our technological capacity," he said. "It is also better than importing finished cars."

The amount of local raw materials the companies would use to produce the vehicles would increase through time, giving room for local manufacturers to produce parts, Tadesse said.

"Our people are also paying less for locally assembled cars than they would have paid for imported cars," he added.

The assembly plant is located on 8,464sqm of land in the Kality district rented from a private company, according to Juequan Pan, general manager of Yangfan.

Juequan's company will soon have its own plot either by purchasing the plot where it is now located or by acquiring land at the industrial zone in Mojo, he said.

Parts for 64 cars have already arrived at the Port of Djibouti while more parts for 24 other cars will soon be shipped from China, the manager said.

The company's initial investment was stated to be 1.5 million dollar, with plans to boost it to five million dollars by the end of 2010.

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