Riding into the future

Workers check cars at BMW Brilliance Automotive Ltd's testing plant in Shenyang. Provided to China Daily

Robots are used to make cars for BBA.

Shenyang shows the way by channeling more high-tech foreign investment into automotive industry

Alexander Morgan has a dream of setting up bakeries at all major commercial locations in Shenyang, capital of Liaoning province, in Northeast China.

"Beer, vehicles and bread are the most representative things of Germany. However, people know little about German bread, and I want more people to have a taste of it," the 37-year-old German says, adding that he hopes the car industry boom will fuel his dreams.

Five years ago, he traveled to China to realize a dream of working abroad. His first stop was at a property company in Shenyang. But after seeing more and more Germans coming to the city for investment and work in the car and related industries, he gave up his well-paying job and opened a small bakery.

That proved to be a good choice for him as there were about 53 German companies in Shenyang. More than 21 of them were engaged in automotive parts or related businesses hoping to cash in on German automaker BMW AG's fast growth in the city.

For many of China's old industrial bases, it has not been an easy task to transform their growth models to ones reliant on modern manufacturing and services. But Shenyang appears to have stolen a march over others with its focus on high-tech foreign investment, especially in the car industry.

BMW and Brilliance China Automotive Holdings Ltd formed a joint venture, BMW Brilliance Automotive Ltd, in Shenyang's Dadong district in 2003. Its operations include making and selling cars and providing after-sales service.

To meet China's surging demand for high-end vehicles, BBA in 2010 raised its investment from 560 million to 1.5 billion euros to build its second factory in Shenyang's Tiexi district with a ground-testing field, more manufacturing facilities, warehouses and the production lines for its compact luxury crossover vehicle BMW X1.

The Tiexi factory has also upgraded engine production to 400,000 units by using the joint venture's funds to build a new engine plant at a new site next to the vehicle plant.

It is hoped BBA will be able to produce 400,000 cars and 800,000 engines a year. The Tiexi plant will soon overtake production in Germany and the United States, and become the biggest production base of BMW in the world, company officials say.

"Shenyang used to be a traditional industrial base, but now it is turning to high-tech and high-end manufacturing. It's a result of our joint efforts with local government over the past years. We created our own 'Chinese Dream' here," says Olaf Kastner, the chief executive and president of BBA.

BMW is not the only car major that has carved a niche in Shenyang. GM has also achieved its "Chinese Dream" in the city.

Shanghai General Motors Co Ltd, an alliance partner of GM, invested in the city as early as 2004. The Phase III expansion project of Shanghai GM (Shenyang) Norsom Motors began trial production last month. It will be the largest factory construction project of Shanghai GM, mainly producing small and medium-sized vehicles with an annual capacity of 300,000 cars and 450,000 engines.

Shenyang now has four car OEMs - BMW Brilliance, Brilliance Jinbei, Brilliance and Shanghai GM (Shenyang) Norsom Motors - concentrated in the northeast of the city. The auto-production base of the city, covering 70 square kilometers, has attracted more than 100 auto parts enterprises, forming a modern industrial chain system with vehicle and parts industry as the core.

In the past few years, Shenyang's car industry has developed rapidly. Its annual output increased from 135,000 vehicles in 2003 to 1,041,000 in 2013. The annual output value climbed from 100 billion yuan ($16.1 billion; 11.7 billion euros) in 2011 to nearly 200 billion yuan in 2013.

The expansion projects of the automotive OEMs has progressed smoothly, with a BMW 5 Series expansion plan going on stream, Shanghai GM (Shenyang) Norsom Motors' new vehicle and engine plant recently launching trial production, and the H2 project of Brilliance Jinbei is taking shape.

Following the steps of auto giants, companies such as Draexlmaier Group, ZF Friedrichshafen AG and Wurth Group have all moved production lines to Shenyang to supply automobile parts for vehicle production.

Huang Taiyan, president of Liaoning University, says vehicle manufacturing and related industries can help Shenyang transform its heavy industries. To meet the demand of foreign companies, the city's service sector will need to be improved significantly if it wants to achieve its long-term goal of becoming a top-tier city.

"Shenyang will make the car industry one of its pillar industries and fully support its development by perfecting supporting industries and optimizing industrial structure. We hope to cooperate with more global companies in the future," says Zeng Wei, the Party secretary of Shenyang.

Contact the writers through liuce@chinadaily.com.cn

(China Daily European Weekly 04/11/2014 page15)