Geely's Belarus car plant begins series production

Geely's Belarus car plant begins series production
The Belarusian-Chinese joint venture SZAO BelGee but now has gone into production with Belarus-made components for the first time.
By bne IntelliNews November 19, 2017

The first mass-produced Belarusian cars rolled off the assembly line at the new Chinese-based BelGee car plant in November, as the former Soviet republic continues to develop as China’s production bridgehead into Europe.

The Belarusian-Chinese joint venture SZAO BelGee was established in 2011 to assemble Geely brand cars in Belarus based on the import of complete kits manufactured in China. The company assembled the first car in February 2013, but now has gone into production with Belarus-made components for the first time.

Located between the towns of Borisov and Zhodino, at full capacity the factory is designed to make 60,000 cars per annum initially. The first model to come off the line was the Geely Atlas NL3. In its first year the new facility will manufacture 1,800 vehicles, rising to 25,000 cars and 35,000 cars in 2018 and 2019 respectively.

As Belarus ties to balance between the rival forces of Russia and the European Union (EU), China has been a godsend for President Alexander Lukashenko as its investment has given him some wiggle room when dealing with the Kremlin especially.

The president was clearly over the moon at the launch of the plant, which will produce cheap cars aimed largely at the Commonwealth of Independent States (CIS) market to begin with, taking advantage of Belarus’s membership of the Eurasia Economic Union (EEU).

“I've had a dream to launch the production of cars in the country,” Lukashenko gushed at the opening ceremony of the SZAO BelGee  plant, as it is officially called, on November 17.

“Our friends responded to my request and helped to set up this wonderful factory. They have also given a loan. Therefore, first of all I would like to say that my dream to produce a car in Belarus has come true,” Lukashenko said to the assembled executives and journalists.

Lukashenko went out of his way to thank the People's Republic of China, and in particular China President Xi Jinping, for their support. “Very soon I will have an opportunity to thank him personally for responding to my request and helping us to launch this production,” the president remarked.

The car plant is the second big developed project by China, which has already invested heavily into the Great Stone industrial park, a manufacturing, distribution and logistics plant outside of Minsk.

China’s investments to date have not brought the locals as much benefit as appears at first glace as Chinese companies are usually given the job as general contractor on government-sponsored projects and these companies ship in Chinese workers to do the work.

That could change with the BelGee plant, where 50% of the inputs are supposed to be sourced locally and so should have a significant spinoff effect, spurring local investment and jobs into supporting industries.  Belarus has a long history of engineering prowess that stretches back to Soviet times.

The localisation rate at the new factory will rise from 31% at the plant’s inauguration and will exceed 50% in 2018, claimed Deputy Prime Minister Vladimir Semashko during the opening ceremony.

In particular, the cars are equipped with engines and gearboxes made by the Borisov-based engine factory Geely, with Belarusian and Russian accumulators, and tyres made by Belshina – all Belarusian companies. The Belarusian components will then include the front axle and the back axle, wheel disks, ABS and ESP systems, and seats, Semashko said.

The project is also an import-substitution drive and Lukashenko says he has “forbidden the entire power vertical to buy import cars. We've already bought dozens of [Geely] cars. We will gradually replace the rest now, starting with the central government and ending with municipal government agencies. We are already doing it.”

In other incentives, Lukashenko called for five-year warranties and high quality after-sales servicing, which should have special appeal to domestic buyers: in Soviet times a second-hand Lada was worth more than a new one as it was assumed the first owner had fixed all the problems the car had after leaving the factor as the quality of production was so low.