Chinese car manufacturer set to move into new Ethiopian assembly plant

Ventures Africa - Chinese-owned car manufacturer the Lifan Industry Group Co. will take possession of a production plant in Ethiopia early next year as the company continues its African expansion plans.

The company revealed that the move into the new assembly plant – billed for February – would involve a $ 3.5 million outlay, with Lifan envisaging the potential for much higher further investments should the plant be as successful as planned.

General Manager of Lifan Liu Jiang told Bloomberg that the company – through its Ethiopian unit Yangfan Motors Plc – may be willing to spend up to $ 30 million within a five year time-frame should vehicle sales continue to grow in line with currently strong trends.

Yangfan this year sold 800 cars from its Ethiopian operations – accounting for one third of Ethiopian-assembled car sales – and earning the company 240 million Ethiopian Birr ($13 million), which the company hopes to increase by a further 50 per cent next year with the help of the new assembly plant.

The company has already spent at least $5 million investing in Ethiopian operations, according to the General Manager.

Ethiopia is proving a popular market for foreign investors given the political stability in the country, the large population equally high demand, and the government's encouragement of foreign investment with respect to certain sectors.

Liu commented on the attraction of Ethiopia to his company, noting the strong ties between Ethiopia and China, and adding: "The economy is growing, everything is growing…Of course it has great potential."

According to World Bank statistics, Ethiopia's main trading partner is China; while the International Monetary Fund has predicted that foreign investment by the end of the current fiscal year will total 4.5 percent of the country's gross domestic product (GDP).