The Eastern Cape is turning to China in a high-stakes bid to secure the future of its automotive sector, as a R430m commercial vehicle investor prepares to establish operations at the East London Industrial Development Zone (ELIDZ).
The investment announcement comes amid advanced negotiations between the provincial government and another Chinese vehicle manufacturer over a potential R6.5bn injection into Buffalo City Metro’s industrial zone — a move that could reshape the region’s manufacturing landscape.
Premier Oscar Mabuyane revealed during his state of the province address (Sopa) at the Raymond Mhlaba Chamber in Bhisho on Thursday that commitments had been signed between an unnamed Chinese vehicle brand and ELIDZ’s strategic partner, the Automotive Industry Development Centre (AIDC).
The province’s focus on Asia follows persistent job losses at Mercedes-Benz South Africa’s (MBSA) East London plant and contraction within the automotive sector in Nelson Mandela Bay.
Mabuyane said the government had little choice but to look east.
“We don’t want the ELIDZ to miss this opportunity,” he said.
“There are many other companies coming here. We will even send another delegation to China because we see a lot of Chinese cars on our streets.”
His comments follow trade and industry minister Park Tau’s visit to China earlier in February, while SA is navigating ongoing trade tensions with the US.
During Tau’s visit, an economic agreement with China — expected to be finalised by the end of March — was signed.
It is anticipated to grant duty-free access for South African exports to the Chinese market and create more favourable conditions for increased Chinese investment.
We don’t want them to come here as a finished product, we want to see it being manufactured here, because that means we will get job opportunities
— Oscar Mabuyane, premier
Mabuyane stressed that the province was firm in its manufacturing conditions during negotiations.
“We don’t want them to come here as a finished product, we want to see it being manufactured here, because that means we will get job opportunities.
“This is the only economic sector we rely on. If it collapses, so do our hopes,” he said.
Speaking on the sidelines, Mabuyane confirmed that additional discussions were under way with Chinese automotive giant Geely Holdings, which has a strong focus on electric vehicles (EVs).
“They are considering coming, they haven’t committed on anything, but we are making ourselves available,” Mabuyane said.
Despite recent US court rulings on tariffs, the premier cautioned against complacency.
On negotiations on the African Growth and Opportunity Act (Agoa), the premier said “we seem to be getting better there but we are still going to be affected, especially on the legal part of it, some will be uplifted based on that court decision but you can’t rely on that.”
He said discussions had taken place with Mercedes around the possibility of sharing its production facilities with Chinese original equipment manufacturers (OEMs).
“Unfortunately, with MBSA, all decisions are made in Germany. Even those who are here are left in the dark.
“The last time I had a discussion with them they made commitment, but the economy of scales are pressuring them.
“They are not in a charity space. I understand, they are in business. We are just crossing our fingers.
“We are discussing with them multi-modem production lines that can allow other OEMs to produce in the same plant.”
He confirmed that all automotive sector negotiations were being handled at a national level by Tau.
ELIDZ chief executive Thembela Zweni confirmed the R430m investment related to commercial trucks.
Zweni said the investment signalled resilience in the face of geopolitical uncertainty.
“It pleases me that despite everything, we are still able to attract investors to come to our zone because it was not easy with all these geopolitical issues.”
He said further industrial development was likely.
“The Chinese OEMs, we are on the verge of signing them up, when that happens, there will also be other suppliers.
“We will be seeing a lot of construction in the next two years.”
An estimated 7,000 permanent jobs were expected to flow from the investments over the long term, he said.
We’ve been going around China with the premier to look at investors for our East London port
— Princess Faku, Buffalo City Metro mayor
Buffalo City Metro mayor Princess Faku welcomed the development, saying the city must continue broadening its investment base.
“We support MBSA fully and we have a very good relationship but we need to attract more businesses.
“We’ve been going around China with the premier to look at investors for our East London port,” she said.
Business leaders echoed the call for strict localisation requirements.
Border-Kei Chamber of Business executive director Lizelle Maurice said manufacturing must remain central to any deal.
“I like the fact that he stressed that Chinese vehicles need to ensure that they manufacture here.
“They mustn’t [bring] in a whole car and our government must be strict on that.
“Manufacturing creates more jobs. Cheap imports have destroyed the Eastern Cape economy so the premier must be very strict that these manufacturers set up shop here and build from scratch,” she said.
Opposition parties also weighed in.
DA MPL Vicky Knoetze said the Eastern Cape remained SA’s primary automotive manufacturing hub and warned that the transition to new energy vehicles (NEVs) would directly affect thousands of jobs, suppliers and export-driven industries in the province.
“It is therefore essential that the premier ensures the province has a formal seat at the table in shaping and implementing national NEV automotive policy.”
Patriotic Alliance MPL Tiphany Harmse said her party welcomed the R430m investment, adding that it would bring much-needed employment to the province.
Daily Dispatch
Mandilakhe Kwababana,Asanda Nini
www.dispatchlive.co.za