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Geely targets Russia with new Belarus factory
Reuters | 2017/11/20

MINSK, Belarus -- A joint venture between Belarus and Chinese carmaker Geely launched a plant producing Belarussian-made crossovers, targeting Russia.

The investment is a measure of growing political ties between China and Belarus, a country envisaged as a gateway for China to the European Union, and part of China's giant investment initiative known as One Belt One Road.

China is a welcome source of funds for Belarus, which relies heavily on Russian money to keep its Soviet-style economic model afloat and strongman president Alexander Lukashenko in power.

China is building a new airport in Minsk, energy infrastructure and a commercial park known as Great Stone just outside the capital.

Lukashenko said Friday the plant embodied his dream of having cars produced in Belarus and promised to sign a decree stimulating car sales in the country.

"Our friends responded to my request and helped to create this beautiful plant," said Lukashenko, according to the state agency BelTA.

The plant, 70 km (44 miles) from Minsk in Zhodino, aims to produce 25,000 and 35,000 cars in 2018 and 2019, respectively, and has the capacity to make 60,000 cars per year.

"Ninety percent of the cars produced will be targeted at the Russian market," the company said in a statement.

Belarussian authorities have spoken previously of plans to expand the plant to increase production to 120,000 cars.

But in the first nine months of this year, Geely sold only about 1,700 cars in Russia, and sales volumes fell 55 percent compared to 2016.

According to Russian analysts, the plant, which will take advantage of Belarus's membership in the Russian-dominated Eurasian Customs Union, will allow Geely to increase sales.

But even so, analysts downplayed the ability of the Russian market to absorb more Chinese cars.

"The market is growing, but it depends on prices and the range. In any case they will not be able to sell 30,000 per year," said Sergey Udalov, deputy head of consultancy Autostat.

"It is possible to increase sales to 10,000, but I do not think they will be able to sell more."

The plant is not Belarus's first attempt to establish its own car production. Previous efforts included investment from Ford and Skoda, but these projects folded.

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