A way to development with joint venture (Changan, China and Master Motors, Pakistan)

A ceremony took place at a local hotel of Karachi for joint venture between Changan and Master Motors. Vice president of Changan, Mr. Wang Huanran and Chairman of Master Motors, Mr. Nadeem Malik signed a resource pool agreement with an aim to grow the business faster and increase productivity. They look forward to generate huge profits from not only Pakistan but from other countries too.

Changan is a Chinese company whereas Master Motors is a Pakistani company which is combining their resources. Generally, entering foreign market with joint venture helps both the parties involved in it. Some benefits are that they get access to new market, risk is shared between the partners and there is access to greater resources etc.

Mr. Wang Huanran told in the event that Pakistan’s auto policy is vibrant to attract foreign investments and so they are willing to install manufacturing plant in Karachi, Pakistan. They want to manufacture RHD (Right Hand Drive) vehicles in Pakistan for local and export market. For this purpose they are planning to relocate their entire Changan RHD vehicle industry in Pakistan, within one year.

China’s Belt and Road Initiative is already under-construction from 2013 in Asia. China is investing billions of dollars on this project as this will link old Silk Road with Europe. This will encourage foreign- exchange reserves and China can create new markets for their excess capacity in steel, cement and other metals.  According to one of Changan’s officials, they will take advantage of that BRI (China’s Belt and Road Initiative) and implement their strategies.

“This joint venture will create almost 10,000 direct and indirect jobs in the country”, Daniel told. According to Trading Economics, Pakistan’s unemployment rate remained unchanged at 5.90 in 2016, so it would be a great opportunity for the job seekers.

Both the companies have aim to make Pakistan a leading automobile company by the end of 2025. For this purpose, Nadeem Malik told that both the companies have planned to jointly invest $100 million in Pakistan with 70% share of Master Motors of Pakistan and 30% share of Changan of China. Changan is given right of refusal if Master Motors wishes to sell its shares in future. Moreover, this joint venture has an objective to get listed on stock market within 3 years.

There is the monopoly of three Japanese manufacturing companies in auto sector in Pakistan. With this project, this monopoly is expected to break with Changan’s production of 30,000 units. They have planned to produce these units in double shift and to reach to maximum production within three years. This joint venture has started to select dealers to be part of their team. The team will help them to provide services to their customers and make effective distribution system of spare parts in all major cities of Pakistan.

Currently, Changan is the largest selling brand of China from 10 years in a row and has annual volume of 2,870,000 units. They deal in Light commercial, Multipurpose, Special Utility and Passenger cars. They have launched all products after market research and with safety factor installed in it. Due to this, Changan is ranked no. 1 for continuously 10 years in China, USA, Italy, UK and Japan. Previously they have joint ventures with Suzuki, PSA, Nissan, Ford, Mazda, Scheffler and Bosch. Apart from this, Changan has partnership with Tencent (Internet Service Company) too.

Master Motors has been working from last two decades in automobile industry. Their product line exists of buses and trucks and till now they have successfully sold 17,000 units in Pakistan.

“Pakistan has huge potential in terms of motorization index since it ranked 160 in the world with only 18 vehicles per 1,000 inhabitants,” Malik said and further added  “Together with Changan we can tap the market potential while leading on technology front and offering the latest technologies at affordable price to deliver unprecedented value to the customers.”

We hope this joint venture between Changan and Master Motor achieves their goals and this joint venture act as an important role for both the countries. It seems it would benefit the economy of the countries but will this strategy be implemented as it is formulated?

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