Vehicle agreements on the rise with China

During the 13th session of the Vietnam-China Economic and Trade Cooperation Committee held in Beijing last week, Chinese Minister of Industry and Technology Jin Zhuanglong said that enterprises of the two countries should promote cooperation in areas of mutual interest such as raw materials, vehicles, electricity, and joint development of industrial park systems.

“Many large vehicle companies in China have planned to expand production in Vietnam. The Chinese Ministry of Industry and Information Technology is committed to supporting Chinese enterprises to expand investment, based on the needs of each country,” said Zhuanglong.

On September 30, Omoda and Jaecoo, two brands under the Chinese auto giant Chery Group, announced plans to build a joint venture vehicle manufacturing factory in the Hung Phu Industrial Park, in Thai Binh province in 2025. The factory, a partnership between Geleximco Group and Chery International Group, will mark a significant step in Chery’s goal to make Vietnam a key manufacturing hub for Southeast Asia.

Chery is choosing Malaysia and Vietnam as two Southeast Asian destinations for building a global factory chain. In particular, it has determined that Vietnam will become Southeast Asia’s key vehicle manufacturing centre. According to Chery, the plant will improve the branding of Chinese automobiles in Vietnam and enable it to “build vehicles that are localised for Vietnamese and optimise their potential”.

The project is expected to create more than 10,000 jobs, including for highly skilled workers who can utilise modern technology.

Previously, in November 2023, Geleximco and Chery announced the signing of a contract in principle to build a vehicle factory in Thai Binh to produce Omoda and Jaecoo branded cars with a capacity of 200,000 vehicles per year, with a total investment of $800 million. It aims to launch products here by the end of 2025.

In 2023, Chery vehicle’s export output reached nearly one million units. In June 2024, the representative of the joint venture distributing Omoda and Jaecoo car lines in Vietnam also revealed the plan to open at least 30 dealers in 2025.

“Omoda and Jaecoo are a significant advancement for the globalisation strategy of Chery Group,” said Tony Liu, executive deputy general manager of Chery SA. “We are acutely aware of the need for more diversified products to meet more market segments as the consumer market is updating.”

Omoda and Jaecoo showrooms are promised to be equipped with the most modern technologies. Products distributed in these showrooms include petrol vehicles, plug-in hybrid vehicles, and pure electric vehicles. During 2024-2025, these car lines will be imported from Indonesia and take advantage of import tax in the ASEAN region

On September 23, Geely Auto Group signed a joint venture agreement with Tasco for the manufacturing and assembly of automobiles in Vietnam.

The joint venture that assembles cars can produce up to 75,000 cars annually. This will benefit both the home market as well as exports to nations with which Vietnam has free trade agreements.

The project is expected to require a $168 million total investment, of which 64 per cent will come from Tasco. With the option to eventually include other brands, the joint venture will initially assemble cars under the Lynk & Co and Geely Auto brands. The first cars are anticipated to be delivered to customers in early 2026, with the plant anticipated to begin construction in the first half of 2025.

In addition, Tasco and Geely will work together to draw in additional funding to finish the supply chain for parts and components, build a centre for automotive research and development in Southeast Asia, start a university for technical automotive education, and invest in the production of smartphones in Tien Hai Economic Zone.

Geely Auto will be distributed by Tasco Auto. Geely sold 1.31 million units in the first eight months of 2024, up 33 per cent on the previous year.

Chinese electric vehicle giant BYD also set plans to aggressively expand its dealers in Vietnam to about 100 by 2026. “With presence in 88 countries, BYD sees a golden opportunity to develop in the Vietnamese market,” said CEO Vo Minh Luc at a VIR conference in August.

Minister of Industry and Trade Nguyen Hong Dien that there is still much room and potential in the industrial fields of automobiles, minerals, mechanical engineering, aerospace, aircraft manufacturing between Vietnam and China for cooperation and development.

“The proximity between Vietnam and China, combined with Vietnam’s participation in a series of free trade agreements, has brought the production and supply chains of the two countries closer together, creating more opportunities for cooperation in industrial sectors,” Dien said.

Charoen Pokphand Foods (CP Foods) will invest nearly $1 billion in overseas plants as well as research and development this year, accelerating its pursuit of growth outside Thailand.

Vietnam Airlines and Jetstar Pacific have become the latest Vietnamese carriers to change schedules of flights linking the country with China in the face of the acute respiratory disease caused by the novel coronavirus (nCoV).

Cooperation between Vietnam and China is expected to be further strengthened, driven by the two countries' recent agreement to facilitate more transport ties by road, air, sea, and river to boost bilateral trade and cultural exchanges.