Africa is not only an exotic destination for explorers but also business executives. Since the threshold to enter the market is lower, many Chinese automakers consider the African market as one of enormous opportunity. However, despite comparable easiness to enter, Africa has proved itself to be difficult to achieve success.   Following the examples of Geely, Chery and Great Wall Group, FAW Huali (Tianjin) Automobile Co. has also prepared itself for its entrance into Africa with its possible inking of export agreement by the end of year. Tianjin-FAW’s Huali brand has started exports to the US at a very early stage and has expanded into West Asia in the last two years. Among all the developing countries, automakers generally consider Southeast Asia, Russia and South America to be the best markets their products. According to the China Chamber of Commerce for the Import and Export of Machinery and Electronics Products (CCCME), China has seen increase in both auto exports and sales to African countries in the first eight months of 2006, which the total export volume to Nigeria has increased by 17% year-on-year to more than US$360 million and a 138% year-on-year increase in export volume to Egypt.   “Great Wall Auto started exports to Africa in 1999. First, Africa is not equipped with a mature local auto industry. Therefore, it does not have high requirements or a prolonged certification process towards auto products. Second, Chinese auto products generally position themselves as economical which fit with the demands of the African market. Third, Africa has lower customs duties. Although it varies in different countries, customs duties generally don’t exceed 30%. All these reasons provide a favorable situation for us to enter the market. Up until now, we have exported 26,000 autos in total, among which more than 20% that are exported to Africa. The number comes second after the Middle East,” said a senior manager with Great Wall Auto overseas department Wang Shihui.   “We have been exporting HQ, MR series and Huapu to Africa since 2004 and now we are planning to expand the export scope to cover almost all our auto models. Geely has exported more than 13,000 auto units so far this year and exports to Africa contributed more than 20% of our total,” said Geely marketing chief Zhang Xiaodong.   “Although the African market hasn’t established a high barrier, we still meet great competitive pressure in retaining our position there. Chinese automakers need to compete with other foreign brands, particularly those from Japan and Korea that have pricing and product positioning strategies similar to ours. We will now focus on promoting the products that Japanese and Korean brands have yet to get involved with. In addition, Chinese firms should export those auto models with simpler disposition to differentiate ourselves from Japanese and Korean products,” added Wang.   Starting 1992, a large number of foreign auto firms started to enter Africa. Egypt, for example, currently has 18 foreign auto firms including General Motors, BMW and Toyota, all of which have established local manufacturing entities. In South Africa and Algeria where car ownership is comparatively higher, firms from Korea, Japan, Malaysia, Germany and France dominate the auto and auto parts markets.   Entering African market, as a matter of fact, requires more than mere exports. “In most African countries we export vehicles to, we select a local distributor and have it develop a sales and distribution network for our product. In this way, it is easier for us to minimize risk and handle any sudden changes that arise in the market. However, if we want to have a more regular development at local level, we have to establish our manufacturing entities there,” said a spokesperson for the African market department at Great Wall Auto, “Apart from establishing production bases in Nigeria and Tunisia, Great Wall Auto plans to establish operations in other countries as well.”   Changing government regulations is another issue Chinese auto makers are concerned with. Egypt, for example, has imposed new regulations on foreign production entities in the country. “As a rising new market that is still under continuous evolution and development, Africa remains an unstable market in terms of policy environment and market pattern. Therefore, it is both opportunity and challenge to Chinese auto makers,” added Zhang, “However, for Chinese auto makers of comparatively limited strength, such opportunity should be seized.”   In 2005, China's vehicle output grew 12.56% to 5.71 million units over the previous year, and sales of domestically made vehicles grew 13.54% to 5.76 million units, according to statistics from China Association of Automobile Manufacturers. A total of 172,800 cars have been exported, up 120% year-on-year. China Market Journal