Chinese car factories' long march in Russia

　Russia's Economic Development and Trade Commission had issued a decree forbidding foreign carmakers from building new plants.

　　However, this decree seems to apply only to manufacturers from China. Seven Chinese car companies have so far applied for licenses in Russia but only one of them, Chery Automobile, has been granted approval. Yet all Chinese automaker’s big American, European, Japanese and South Korean rivals have got the go-ahead; several are already making cars in Russia. Now there are reports that Russian carmakers are lobbying for Chery's license to be revoked.

　　Another Chinese firm, Great Wall, first declared its intention to invest $40m in a plant in the region of Tatarstan 18 months ago. It says it remains in negotiations with the Russian authorities. But the decree will force it and the five other applicants to revisit their plans for Russia.

　　Until 2005 there were no exports of Chinese cars to Russia at all. This year, 120,000 vehicles are expected to arrive. In a country where 2.1m vehicles were sold last year, the Chinese manufacturers' volumes are still small. But, according to official figures, Chery's sales grew by 580% in the first eight months of 2007, to 24,000. Other foreign brands grew by an average 66%.“Russia is one of the most promising markets for Great Wall,” Shang Yugui, a spokesman for the company, said this week.

　　Unlike Western carmakers, Chinese ones compete head-on with Russia's indigenous manufacturers on price. That may be the reason why Chinese truck manufacturer’s long march in Russia is so bumpy.

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