NAIROBI, KENYA, JAN 18 — Chinese motor vehicle manufacturer Foton Motor Group has revamped its operations in Kenya, as it seeks to recoup its share of the automobile market in the country and the East Africa region.
Through its subsidiary — Foton Motor Kenya Limited, the company is setting up an operation centre in Nairobi and an automobile assembly plant in Mombasa, in an initial investment of $2 million (about Ksh 205.9 million) with planned future expansion.
Foton motors Kenya limited president Apple Sun said on Thursday the Mombasa Knocked Down (KD) units assembly plant will be able to produce between three and four units a day.
The first unit is expected to be out in the next two weeks.
“We target to assemble about 1,000 units per year and in the next five years, we should be assembling up to 8,000 units,” Sun told journalists in Nairobi.
Senior Vice President of Foton international, Cheng’ Wanzhi, said the company is seeking to stabilize its operations in Kenya, which will remain the centre of its operations in East Africa, as it continues to penetrates six other regional markets among them Tanzania, Uganda and Rwanda.
“We are enhancing our Africa strategy. We will continue to support our Kenyan subsidiary as we introduce new products and ensure growth. We will continue offering superior products and services in Kenya and the region,” Wanzhi said.
The two spoke at Safaripark hotel during the launch of the company’s new Foton AUMAN EST heavy duty truck in Kenya among other vehicle models.
Foton chairman (Kenya) Li Hongjun said: “Looking into the future , Foton will firmly follow the development concept ,technology leading into the future, as we forge to be a world class manufacturing enterprise.”
“We will positively explore the international market and provide our customers with systematic solution. We wish to make more contribution to Kenya in the future,” he added.
Foton played a major role in providing products and services to China Road and Bridge Corporation, during the construction of the Mombasa-Nairobi Standard Gauge Railway now operational.
Kenya’s Industry, Trade and Cooperatives Principal Secretary, Patrick Nduati, urged the company and other investors to take advantage of the country’s improved business environment to increase local assembling of units, among other investments.
This includes the reduced corporate tax for companies assembling vehicles in the country.
Under the Finance Bill, 2017 published on April 3, 2017, the National Treasury amended various tax provisions while at the same time providing clarity on the existing provisions.
The Finance Bill introduced a reduced corporate tax rate of 15 per cent for companies assembling motor vehicles locally, for the first five years from the year they commence operations.
The 15 per cent rate shall be extended for a further period of five years if the company achieves a local content equivalent to 50 per cent of the ex-factory value of the motor vehicles, the Finance Act states.
PS Nduati said the government is also working towards reducing the cost of power in the country.
“Foton should exploit Kenya’s position as the emerging most attractive investment destination in Africa,” he said, “I encourage Foton to take advantage of the growing market in Kenya and the region especially on commercial vehicles.”
The latest development is seen as an effort by the company to stabilize its operations in Kenya after stumbling in 2016, when its multi-million shilling Nairobi assembly plant was placed for auction over debts.
It affected its 10-acre land investment along Old Mombasa Road where it was building a 10,000 units-a-year warehouse for limited vehicle assembly.
Foton was also embroiled in a tax row with the Kenya Revenue Authority.
Foton Motors Kenya limited established in the country in 2012 also fell out with its local partner —Thika-based Kenya Vehicle Manufacturers (KVM), which it had contracted to assemble its brands.
“We had different business ideas so everyone moved on to implement their ideas,” Sun clarified on Thursday, insisting that the company has continued to make sales in Kenya and the region.
“Our sales in Kenya have been increasing year by year with remarkable achievements,” he said.
In the past 20 years, Foton has been focusing on manufacturing vehicles at its own brand aim to lead China and approach world standards, ranked the first in China commercial vehicle industry for 13 consecutive years, and has risen to the largest commercial vehicle manufacturer in the World.
In the recent 10 years, the company has been actively advancing the strategic layout of globalization, realizing the operation of overseas manufacturing plants in 23 countries.
It covers full range of products which include mixer trucks, pump trucks, cranes, medium and heavy duty trucks, buses, light duty trucks, pick-ups, SUVs and VANs.
The company said it is working with banks, among them the Bank of Africa (Kenya)to offer assent financing to customers for the purchase of units.
This is in the wake of squeezed credit as a result of the capping of interest rates, which has locked out risky borrowers.
Kenya has continued to see increased Chinese investments and construction activities, with the most significant one being the SGR project currently on its second phase(Nairobi-Naivasha).
Business Counsellor of China Embassy in Kenya Guo Ce said the two countries will continue fostering a good relationship for development.