Endurance, world class mobility and affordability are the heart and soul of the Strategic Vision Plan 2025 of the China FAW Group – a world-class vehicle manufacturer that is being touted as one of Africa’s “frontrunners in mobility service provision”.
It all began in 1953 when its first assembly plant was constructed, making the China FAW Group Co Ltd, formerly China First Automobile Works, China’s oldest and largest automotive manufacturer.
Fast forward to 1994, the year South Africa achieved democracy. Through innovative research and development (R&D), the company soon discovered that the South African economy was ripe for investment - not least because of its level of development. FAW Trucks SA CEO, Yongjun Li, says: “The market competition environment was similar to that of Europe, and the vehicle emission standard was relatively low. The quality of Chinese products matched the market demand of South Africa very well.”
Through further research the company’s R&D team discovered that the level of truck manufacturing in China was close to that in developed countries in Europe, but the product price was remarkably different. “We found that the performance of Chinese products was very good, both in terms of driving comfort and engine fuel saving. The opportunity for Chinese trucks was in the pressure of rising oil prices. The idea of affordable pricing without compromising quality came up.
It was imperative that the vision meant more than simple investment. Instead, it had to be about the brand’s durability in Africa. And so FAW began its mission of simplifying the mechanics of its vehicles in order to develop a product range that is hardy, reliable and affordable.
Local frontrunner
This then drove the birth of FAW as a local frontrunner in the highly competitive vehicle industry. Realising that the FAW brand was based on a unique level of durability and longevity unrivalled by many other Asian brands, the company’s local founder and successful businessman, Richard H Leiter, recognised the inherent value in Chinese brand trucks. His global R&D set-up and team of more than 5000 top technologists had the skills to position the company as an innovator of pioneering design, new energy vehicles, artificial intelligence, 5G application, new materials and process, and intelligent manufacturing.
“The South African market was regarded as a bridgehead to Europe to accumulate marketing experience,” adds Li. “FAW products competed with European competitors on the same platform to find deficiencies and improve the quality. That is why we selected the South Africa market as our strategic market.”
The story of the FAW SA brand and its acclaimed products is a journey of more than 28 years - from humble beginnings to a multimillion rand undertaking firmly entrenched in the local transport industry landscape.
With an investment of R600 million in the self-owned assembly factory at the Coega Industrial Development Zone in the Eastern Cape and branches in Pinetown and Cape Town, the FAW Group has invested an additional $80 million in South Africa to ramp up the plant and extend the localisation of products.
Value for money
Today, FAW Vehicle Manufacturers SA (PTY) Ltd prides itself on providing value-for-money vehicles that are engineered, developed and rigorously tested to meet the harsh operating conditions in Africa.
“Besides the reliability and affordability of FAW’s truck products for users, we have, together with the South African people, made contributions to the long-term goal of energy conservation and emission reduction in South Africa, the African continent and the world. FAW has reserved Euro 5 and Euro 6 products for the South African market, and there are also many other new energy products, such as electric vehicles,” Li says.
The success of this commitment is one of the first units sold in South Africa. “The unit is still running today and carries the original name – Jiefang. It has clocked over 1.5 million kilometres – unmatched proof of the FAW brand’s durability.”
There is no doubt that FAW Vehicle Manufacturers SA is a game-changer in South Africa and on the rest of the continent. The export of vehicles into Africa, with South Africa as a major distribution hub for trucks, and the growth of an extensive dealer network and service centres with steady, reliable parts supplies and highly trained sales and service personnel, has expanded the company’s footprint in Mozambique, Zambia, Zimbabwe, Malawi, Namibia and Tanzania.
“Part of FAW South Africa's products come from locally-purchased auto parts, which have boosted the development of local small and medium-sized enterprises, including manufacturing and service industries. At the same time, we have solved certain employment challenges, and our annual tax contribution has improved the living standards of many South African people,” says Li.
Corporate social responsibility: the fruits of co-operation
FAW South Africa has been committed to providing reliable, comfortable and economical truck products for users since its entry into the South African market - and together with the South African people, it has made contributions to the long-term goal of energy conservation and emission reduction in the world.
FAW SA has also endeavoured to help local people improve their living standards. Li says the company will give back the fruitful results of co-operation to the South African people. “As a Chinese funded enterprise, we will continue to implement the initiative of ‘One Belt One Road’ proposed by President Xi Jinping under the framework of the ‘comprehensive strategic partnership of co-operation’ determined by the leaders of the two countries,” he says.
In addition to its excellence in the trucking business, FAW prioritises corporate social responsibility. “There are 380 direct employees, including 174 in Port Elizabeth, 181 in Johannesburg, 23 in Durban and 22 in Cape Town. Various training sessions held by us benefited more than 2 000 people - indirectly driving the number of local labour and employment to about 1 500.
“Every year, FAW South Africa donates money and materials to the underprivileged. This includes community donations and school supplies for students.”
FAW SA AT A GLANCE
A model of Chinese foreign direct investment in South Africa
- FAW, an abbreviation of First Automotive Works, was established in 1953 as the first automotive manufacturer in China, with registered capital of R84.96 billion and total assets of R1.01 trillion. In 2021, FAW delivered 3.5 million vehicles to customers. Group sales revenue in 2021 totalled R1.7 trillion. After nearly 70 years’ development FAW has been the world’s largest commercial truck manufacturer for five consecutive years.
- The company is the most successful Chinese automotive brand in South Africa, with a proven track record of steady growth in recent decades. By the end of September 2022, with the continuous improvement of after-sales service quality, FAW had sold 2 000 trucks, equivalent to 11.2% of market share, ranking third in the market. The company hopes to sell nearly 3 000 trucks by the end of the year, a large part of which would be sold to other African countries - creating export income for South Africa.
- With a firm belief in South Africa and its policy of growing the economy by developing manufacturing industries, FAW SA established a local manufacturing plant at Coega in 2012. This is one of the largest Chinese investments in the region. With a designed annual capacity of 5 000 units, the FAW Coega Plant successfully increased its annual output from 324 in 2014 to 2 500 units in 2022. In essence, the company has lived up to its motto: “Build in Africa, For Africa”.
- With only eight Chinese employees, local employees make up 98% of FAW SA’s total headcount. This is in addition to the numerous jobs created during the Coega Plant Project period. All these can be seen as part of FAW’s drive to ensure that operations are fruitful to local communities.