China’s automaker Foton International unveiled its operation center in Kenya’s capital Nairobi on Friday January 18, exhibiting a move the company takes to forge presence in East Africa. The automaker is betting on the thriving construction and favorable reforms there to boost its sales.
The center is designed to departments involving exhibition, training and after-sales, to provide support for its operation that will take localization as the focus. Apart from current four Kenyan companies, it has another six trade agents in East African countries, including Tanzania, Rwanda,Uganda.
Expansion strategies in this region will comply with Foton’s plans for global presence, and can serve ongoing regional reforms, according to Apple Sun, Foton Motor Kenya General Manager.
There are currently 23 model available in the country, seven of which are assembled locally by Associated Vehicles Assemblers (AVA) in Mombasa, the second largest city of Kenya.
Sun also said the partnership with local manufacturers will increase local capacity and reduce costs. Local expertise has a good understanding of the market, and Foton doesn’t need to bring Chinese expertise here.
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The company also targets the market for other products series, including SUVs and pickups. It is revealed that local government is a big buyer. Tanzanian government bought at least 100 SUVs in 2017.
The development of East African countries presents good opportunities for Chinese auto companies, who can provide good vehicles and services for construction and logistics sectors. Booming government-funded construction projects fuels a high demand for tippers and prime movers. And the expansion of transport networks will also boost logistics.
According to latest statistics, China invested $400 million in Kenya from January to October in 2017, making the country the top destination in the continent for Chinese investment.
Local government has pledged to conduct regular reviews of investment environment to make sure that investors can yield as much as possible from their investment.
Peter Munya, the industrialization cabinet secretary, said in a statement that auto subsector could play a substantive role in driving Kenya’s economic development and technological advancement. However, the country is heavily dependent on vehicle imports, which accounts for about 80 percent of the subsector’s total imports.
The government is resolved to fix this. Kenya has announced that age limit of car imports will be reduced from eight to five years starting this July as scheduled.
Sun said Foton expects to sell at least 3,000 vehicles by year 2022. The Chinese automaker now boasts a local market share of 5 to 7 percent.