MercoPress. South Atlantic News Agency

Chinese automakers tempted by the Brazilian market

Chinese automaker Chery reportedly is planning a 700 million US dollars factory in Brazil to tap the country's growing market and to learn more about bio fuel engines according to Sao Paulo’s financial daily Gazeta Mercantil.

“Our development centre is already working on this project” the head of Chery, Yin Tongyao, said in an interview published Friday. The plant for the Latinamerican market would be finished by 2012 with an annual initial production of 150.000 units.

However Yin Tongyao said that before starting a factory in Brazil “we have to develop flex-fuel technology, which we still haven't mastered“.

”Flex-fuel” refers to engines capable of running on bio-fuel, fossil gasoline or a mix of both. Almost all new cars in Brazil, the world's biggest exporter of sugar cane ethanol, feature such engines.

Mr Yin revealed that as of next June Chery will be offering four gasoline-only models in the Brazilian market: two of them imported from neighbouring Uruguay, where the Chinese independent auto maker already has an assembly plant, and two directly from China.

Chery vice-president Zhou Biren acknowledged to Gazeta Mercantil that the biggest challenge faced by Chinese automakers is overcoming the perception that their vehicles were “cheap and poorly made”.

“It’s hard work, but trust must be built step by step. The same happened with the Japanese and Koreans cars and now they are considered quality products, better than the US or European cars”, said Zhou Biren.

Chery was China's main auto exporter in 2008: 135.000 units, over a quarter of all shipments, and an increase of 12.6% over 2007, according to the latest release from China Association of Automobile Manufacturers.

In related news Rio de Janeiro’s state governor is scheduled to meet with Baosteel Group Corp and offer land and partnership opportunities in a bid to persuade China’s largest steelmaker to reverse its decision to leave Brazil.

During his visit to China Governor Sergio Cabral will be talking of a package that includes land and other incentives at the port of Acu, southeast of the state, said Renata Cavalcanti, Rio’s industrial development Deputy Secretary.

Baosteel abandoned Brazil after two steelmaking projects in partnership with Cia Vale do Rio Doce, the world’s biggest iron-ore producer, failed for political and environmental reasons, the Rio based China- Brazil Business Council revealed last week. Investment was estimated in several billions US dollars.

“We want the Chinese to set up steel-mills in Brazil, not sell steel to Brazil” said Cavalcanti who added that the delegation will also meet with Chinese shipbuilders to interest them in investing in Rio do Janeiro, which has a long tradition an expertise in the naval industry.