Hong Kong listed mainland car maker Geely Automobile Holdings Ltd yesterday signed a partnership agreement to assemble its own brand cars in Malaysia.

According to Geely vice-president Zhao Jie, production of Geely cars in the Southeast Asian country will kick off next March at a plant owned by Malaysian manufacturers Information Gateway Corporation SDN BHD (IGC).

Employing around 500 Malaysian workers, the plant will turn out 30,000 Geely branded cars next year with components supplied from China, Zhao said.

The first Geely car to be produced in Malaysia will be the 1.6-litre Freedom Cruiser, the company's latest model launched last month, he said.

Two new models, larger than the Freedom Cruiser, will be introduced at the Malaysian plant later, said Zhao.

Geely, 60.68 per cent owned by Li Shufu - one of the mainland's richest people - will be the third Chinese automaker to produce cars abroad.

Chery Automobiles, controlled by the local government in Wuhu, East China's Anhui Province, began to produce cars in Iran at the end of last year.

Chery is also in talks with Malaysia's Alado Automobiles to produce cars there.

Brilliance China Autos, another Hong Kong-listed mainland based car maker, signed an agreement with an Egyptian partner last month to produce cars in the North African country.

Egyptian production of its Zhonghua-brand sedans will begin at the end of August.

As well as producing cars in Malaysia, Geely's Zhao said the company would also export 10,000 cars to the country through IGC next year.

This year, Geely hopes to export 3,000 Haoqing compact cars to Malaysia, he added.

"The plant in Malaysia will be Geely's manufacturing base for Southeast Asia, which will target the whole market in the region," said Zhao.

Malaysia is one of 10 member countries of the Association of Southeast Asian Nations (ASEAN), which have signed an agreement to slash tariffs on automobile exports to each other.

Tariffs on vehicles imported from ASEAN members were cut to 20 per cent at the beginning of this year from as much as 190 per cent in the past.

"Chinese-made cars will have good prospects in Southeast Asia, especially when China reaches a free trade agreement with ASEAN," said Liang Yangchun, an industry analyst with the State Council Development and Research Centre.

China is in talks with ASEAN to clinch an overall free trade agreement in 2010.

"However, Chinese car makers will only be able to play in the economy end of Southeast Asia's car market as many international auto giants, such as Toyota, already have a strong presence there," Liang told China Daily.

"To go abroad is a good way for some Chinese car makers to expand their business as they face mounting competition from the world's auto giants in the slowing domestic market," he added.

All of the world's major automakers have formed joint ventures in China.

Demands for cars in China will grow by 15 per cent to 2.6 million units this year, the China Association of Automobile Manufacturers predicted.

The growth figures are the same as in 2004 but down from more than 70 per cent in 2003.

Zhao said Geely aims to double its overall car exports this year to 10,000 units.

In the first four months of this year Geely exported more than 3,000 cars.

(China Daily May 31, 2005)