SAIC Motor plans import-export unit in Shanghai free-trade zone

SAIC Motor Corp., China’s largest automaker, plans to set up a trading company in a proposed free-trade zone in Shanghai to help the carmaker expand overseas and reduce costs.

The new company under SAIC Motor will mainly focus on the import and export of vehicles and parts, according to Judy Zhu, a spokeswoman for the automaker, whose parent is controlled by the Shanghai government. The trading business handled by the new company in the free trade zone will help the company reduce costs, she said.
The proposed Shanghai free-trade zone, approved by China’s State Council headed by Premier Li Keqiang, is part of the central government’s plan to develop the city into a global financial and shipping center by 2020. A draft plan for the area seen last week by Bloomberg News included expanded opportunities for foreign companies in industries from banking to health insurance.
The automaker also plans to establish a sales venture in the Middle East this year and in Latin America through the new trading company, according to a company official with direct knowledge of the plans, who asked not to be named because the information is private. Zhu said the company is exploring potential businesses in overseas markets.
Citigroup Inc., HSBC Holdings Plc and Standard Chartered Plc are among financial institutions that have signaled interest in the free trade zone, which in addition to foreign trade will feature looser rules on matters such as interest rates and business licenses.
The plans for Shanghai -- together with another zone in Qianhai in the southern city of Shenzhen -- have raised concerns in Hong Kong that the special administrative region’s status as a gateway for Chinese companies will be eroded.
SAIC targets to sell 240,000 units of its Roewe and MG brands this year and for exports to exceed 10,000, President Chen Hong said in May. The automaker is building an assembly plant in Thailand to make MG brand cars in 2014 and also exports GM’s Chevrolet-branded vehicles to markets such as India.
Its shares have declined 21 percent in Shanghai this year, compared with a 1.2 percent drop in the benchmark Shanghai Composite Index.
The share prices of companies set to benefit from the initiative have soared, with Shanghai International Port Group Co. and Shanghai Waigaoqiao Free Trade Zone Development Co., Ltd. having more than doubled in the past two weeks. (Bloomberg)