As for China’s neighboring markets, Pakistan has a huge advantage over many other markets in terms of investment environment and political stability. Chinese auto companies should proceed from the point of view of industrial establishment rather than product sales, with industrial clusters of spare parts, and target surrounding markets and even European and American markets through cooperation with Pakistan.
The above views were expressed by the Chief Representative of Pakistan Shenglin Consulting Co (PSC), Jian Peng (Philip), who has been working in the automotive industry for over 20 years and communicating the feasibility of an investment and ‘a transfer of production capacity to Pakistan. He believes Pakistan is a window for China to the world, and it is also a bridge and a link for Chinese products and technologies to connect to the world.
The right time to invest in the automotive industry
The development of the automotive industry is a manifestation of a country’s overall national strength and an important indicator of a country’s economy. As a leading industry, the engine of the national economy, the upstream side of this enormous industrial chain involves raw materials, including steel, oil, rubber, etc. reaches the market, retail and consumer credit. Philip said the whole process of producing and marketing a vehicle can provide employment for at least 20 to 30 people.
“The current situation of the Pakistani auto industry is very similar to that of China in the early 1990s, and its consumer market is about to take off. Philip stressed, “The Pakistani government is also aware of the need to increase investment in the automotive industry, from strengthening road infrastructure construction to investment policies in special economic zones, as well as measures to encourage and stimulate consumption. We can all see that the auto industry is about to usher in a period of “boom” in Pakistan.
Currently, the biggest difference between Pakistani and Chinese vehicles is that Pakistan has straight rudder vehicle market, so many Chinese car makers are not ready to fully enter Pakistani market. “Nevertheless, if the cooperation between Chinese and Pakistani auto industry faces the international consumer market, and Chinese companies can transplant the European and American standards that they learned in Pakistan, cars assembled in Pakistan can expand the market. left-rudder cars, ”said Philip. .
Chinese Automobile Entry into Pakistan undertakes the mission of helping Pakistan to quickly establish a corresponding spare parts industry and quickly realize the localization of spare parts. From the perspective of the direction of Chinese investment in Pakistan, investing in the entire industrial chain in Pakistan, rather than just CKD, is an important opportunity for cooperation between the two countries in the future. Philip pointed out that the production of technology and equipment and the transfer of production capacity from China can quickly pull the core workpiece support capacity from Pakistan. Once Pakistan has formed the appropriate auto support capability, manufacturing and maintenance costs will be greatly reduced.
Cooperation between China and Pakistan in the automotive industry is currently mainly dominated by fuel vehicles. As a future trend, new energy vehicles have gained wide attention, but they are still in the testing period of the market, which requires further observation. “Pakistan’s entry into the field of autonomous driving can first be considered from some specific application scenarios and site environments, such as automatic loading and unloading of ports and terminals, taking the initiative to realize the relative safety and stability of autonomous driving in engineering infrastructure, which can also effectively save manpower resources. Philip added that it can be considered a scientific research project. Pakistani R&D institutions, universities, scientific research institutes and support providers can strengthen cooperation with China to seek technological advancements and breakthroughs.
Step by step strategy to reduce logistics costs
It is learned that PSC plans to set up a Sino-Pakistani commodity trading center in Hainan and a Sino-Pakistani bonded processing park in the Urumqi Free Trade Zone. Hainan is China’s largest free trade zone, and it is at the forefront of opening up, especially in the aspects of free movement of capital and free establishment of trade, which plays a positive role in commodity trade. According to Philip, in addition to tangible consumer goods and complete sets of equipment for the transfer of capacity and the production of capacity, the products traded also include intangible goods such as technology, intellectual property rights and standardization, in order to facilitate more convenient and efficient cooperation between Chinese enterprises. and Pakistani.
Xinjiang is the central hub of the Belt and Road Initiative and the only land border province between Pakistan and China. With the construction of the China-Pakistan Railway and the expansion of the Karakoram Highway, Philip believes that land transport capacity will be greatly increased soon, which may provide opportunities for the export and processing industries of both countries. . “Chinese companies can migrate their CKD assemblies from coastal areas to Xinjiang, pack them for export to Pakistan, and complete the final vehicle assembly in Pakistan, thus realizing the ‘step by step’ strategy, which will greatly reduce the cost. product logistics. “
This article originally appeared on China Economic Net
Posted in The Express Tribune, August 22sd, 2021.
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