Joint venture on road to success in minibus market

Also in the cards is the manufacture of diesel-powered vehicles to cater to demand from neighboring countries, Chung said.

Although BAW South Africa recently raised the selling price of its taxis to 315,000 rand ($30,395) from 300,000 rand, it is still cheaper than Toyota, which sells its minibuses for about 320,000 rand.

"The Springs plant is the first significant step for BAW in going abroad," Chung said. "The facilities and personnel are in place and the team excellent. However, sales have been hampered due to inadequate consumer financing channels.

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"Vehicle sales are always a tricky situation for overseas companies, and Chinese companies are no exception. It would be worthwhile for these companies to add consumer financing options for long-term success in African markets," he added.

"It is a gray area for most Chinese companies, as, unlike their foreign peers, they do not have the orientation or cultural background to provide consumer finance."

BAW South Africa set up its consumer finance department two years ago with nine employees and a capital injection of 5 million rand. It now provides individual loans of up to 260,000 rand for minibus purchases.

Although its loan portfolio has reached 50 million rand, BAW is contemplating formal alliances with local banks only after it crosses the 100 million rand threshold, Chung said.

"Local banks are more interested in guaranteed returns, and Sasuka is a new brand in the local market. Only about 30 percent of buyers can get loans from banks," said Peter Wu, a manager with BAW South Africa's consumer finance unit.

"We extend financing options to those who can afford a minibus but were shut out by banks for smaller sums," he said.

The company is also adding such features as integrated tracking hardware and GPS navigation to its vehicles.

"Through regular interaction with existing and prospective customers, we hope to reap long-term rewards in South Africa," Chung said.

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