Tijuana site to produce Chinese cars (China meets NAFTA!)

The first Chinese automobile manufactured in North America will be a three-wheeled vehicle made in a factory on the outskirts of Tijuana.

Chamco Automotive, a company set up to import Chinese vehicles to the United States, will open a $300 million Tijuana assembly plant in 2009 that will produce the vehicles of Hebei Zhongxing Automobile.

Hebei Zhongxing, a small, employee-owned company, is a leading Chinese pickup truck and SUV manufacturer located in Baoding, Hebei Province, which surrounds Beijing.

The long-rumored deal was revealed Wednesday by Chamco affiliate ZX Auto, which will import and distribute the Zhongxing vehicles.

Chamco planned to show off two of the vehicles yesterday at the Tijuana Grand Hotel, where Chinese officials met with Baja California Gov. Eugenio Elorduy Walther to demonstrate their appreciation for his recent trade mission to China. But the announcement was put off, said a source close to the deal.

The vehicles, which cleared customs Tuesday, now are scheduled to be displayed next week at the Las Vegas Auto Show and at a media event in Tijuana, the source said.

Chamco reportedly plans to start selling four-cylinder, $13,000 Chinese-made SUVs and pickups in August, then follow with the Mexican-made three-wheel vehicle two years later. All three vehicles will be sold first in Mexico, probably under the name Jhong or Jhong Auto.

Eventually, 3,000 workers will be employed at the factory in Tijuana's new Las Palmas neighborhood. The factory will do supplemental work on the SUVs and pickups from China.

Chamco – so called after the common name for the Chinese automaker's partner, China American Cooperative Automotive of Parsippany, N.J. – has established a distribution network with a Mexican domestic megadealer that will offer the vehicles at 25 to 30 showrooms throughout Mexico, according to a statement by chief executive officer Bill Pollack. The target is to sell 20,000 vehicles a year.

“By starting in Mexico, we have an opportunity to test all of our systems – transportation, services, warranty and all processes – at a low volume a year before we go to the U.S.,” Pollack said.

The SUV and pickup are expected to be made to meet environmental and safety standards for the U.S. and Canadian markets by mid-2008. A sedan and a crossover vehicle will be introduced a year later in those markets.

More than 30 U.S. dealers have been signed up to distribute the vehicles, but the company wants an agreement with as many as 150 dealers in the United States and one megadealer in Canada with 30 outlets.

In its first full year in the United States, Chamco wants to sell 75,000 vehicles, according to an article in Automotive News.

From last year but still relevant:

http://www.signonsandiego.com/news/mexico/20060321-0919-mexico-pacificports.html

Mexico, top private interests look to revamp Pacific ports south of the border

By Will Weissert
ASSOCIATED PRESS

9:19 a.m. March 21, 2006

Associated Press
Workers use a huge cargo crane to unload a container vessel docked at the Ensenada International Terminal port facility in Ensenada, Mexico.
MEXICO CITY – Mexico and major shipping interests are bolstering Pacific ports south of the border, hoping to catch future runoff as an increasing tide of Asian cargo sails toward already clogged ports in California.

Mexican officials in coming weeks plan to study the feasibility of turning Punta Colonet – a sparsely populated, wind-blown bay on the Baja Peninsula 150 miles south of the U.S. border – into a super-port on par with twin facilities at Los Angeles and Long Beach, the largest western port complex in North America.

Farther south, Hutchison Port Holdings, the world’s largest independent port operator, plans to pump about $200 million into expanding container ship capacity at Lazaro Cardenas, Mexico’s deepest port.

“We are ready. The port is ready. The infrastructure is ready for anything shipping companies need,” said Hector Carranza, business director for the port at Lazaro Cardenas.

Private companies have approached ports in this country looking for backup routes in case of work stoppages in California. A dispute between shipping lines and dock workers led to a shutdown of all major western U.S. ports in 2003, sending thousands of container ships steaming south.

“The world’s biggest retailers want to have more options open,” said David Eaten, a spokesman for Kansas City Southern de Mexico, the U.S. railroad that serves Lazaro Cardenas.

Los Angeles-Long Beach handles 40 percent of all the cargo shipped into the United States and 80 percent of U.S. imports from Asia.

[snip]

Mexican authorities say lower port fees, as well as jitters about terrorist threats on U.S. soil – newly fueled by controversy over a plan where a state-owned United Arab Emirates company would take over East Coast ports – may also push business their way.

Expansions at Lazaro Cardenas are focused on goods bound for the Mexican market. But with the amount of cargo steaming into the American West Coast expected to outpace the capacity of ports there in coming years, Mexico wants to be ready for the surplus.

Lazaro Cardenas’ “business model is not to take business away from the U.S. West Coast ports but rather to absorb a significant percentage of projected growth,” Kansas City Southern said in a statement prepared for this story.

Officials in Kansas City want to build a $3 million inland border facility staffed by Mexican customs inspectors.

Leaders from both countries are still negotiating the details of the plan, which seeks to allow trucks carrying U.S. goods bound for the Mexican market to be inspected and sealed in Kansas City, then head into Mexico without delays at the border.

Lou Dobbs segment on this tonight.

http://transcripts.cnn.com/TRANSCRIPTS/0706/15/ldt.01.html

Communist China is also, well, now exploiting a gapping loophole in that wonderful trade arrangement called NAFTA. Are you ready? One of China’s largest car makers is about to build an assembly plant in Tijuana, Mexico, the purpose? To build and export vehicles into the United States. And it will be duty-free

BILL TUCKER: Well, this should be a big, giant wakeup call, a shot across the bow, because this is a $300 million investment in an assembly plant to build sport utility vehicles and trucks down in Mexico, Lou.

Now Zhongxing will be the first Chinese automaker to build an assembly plant down there. It will be right across the U.S./Mexico border with Tijuana with an annual production of 150,000 vehicles beginning in 2009, roughly 37,000 of those will be exported to the United States.

And as you mentioned, they will come in tariff-free. Trade economist Peter Marichi (ph) at the University of Maryland points out that Mexico is in, “ an excellent export platform for the Chinese because they can - exploit, excuse me, a number of free trade agreements. Under NAFTA, Zhongxing will gain access not only to the U.S. market but to Mexico’s other trade agreement markets, those vehicles can be shipped duty free to Central America, South America and Europe.[snip]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.