Chinese automaker JAC Motors announced Friday it will invest 500 million dollars to build a factory in Brazil's north-eastern Bahia state its first outside China.
The factory, slated to open in 2014, will have the capacity to produce 100.000 units, Jianghuai Automobile Co. said in a statement. A total of 3.500 jobs are expected to be created.
The investment will be made by the parent company in China together with the SHC Group, which represents its business interests in Brazil.
In August, the company put the preliminary value of its investment at 900 million dollars.
The deal had been called into question when the Brazilian government decided to raise taxes on imported vehicles not built with at least 65% of the parts made in Brazil or coming from Mercosur countries.
The decision was aimed at blocking a flood of Chinese automobiles into Brazil, now the world's number four car market. It means JAC Motors will have to pay higher taxes until its Brazilian factory is operational.
Sergio Habib, president of JAC Brazil operations, said he hoped Brasilia would reconsider the higher taxes now that JAC investment plans are confirmed.
JAC has entered the Brazilian car market with competitive prices compared to offerings from industry heavyweights General Motors, Volkswagen, Fiat and Ford.