It seems the Russians are getting very, very protectionist about their car industry, which seems to make nothing but terrible cars (except the Lada Niva). A few weeks ago we reported that Russia had ‘dropped the bomb’ on Chinese car makers, it seems the mustachioed, fur hat wearing policy makers in Moscow have gone a step further.
Chinese car makers often export cars to Russia using a CKD format (complete knock down) this means the factory in China gets all the right pieces together and ships them to a Russian factory where, the workers get the worlds hardest Airfix model to build. The Russian government originally charged a 15% tax on these CKD kits, as they are not a full car, but not individual pieces either.
The Russian government hauled Cherys partner in Russia, AVTOTOR, into court the other week charged with failure to pay an 80million USD tax bill. AVTOTOR claims the tax bill should be at 15% per CKD kit, but the Russian government now says the CKD kits are to be taxed at 25%, as the Chinese are essentially just sending ’screwdriver’ kits over the border, basically the cars just need putting together with a screwdriver.
To qualify for the lower 15% tax, Chinese manufacturers must send their cars unwelded, and without body paints, to further complicate matters Chinese manufacturers must have a license to operate a car factory (a car factory being able to spray cars, and weld them) n Russia, but of course they cant get that license.
Motoring industry sorts believe that Chinese car makers will be forced to quit the Russian market, as the cost of doing business is soaring.
I hope Chery and other Chinese carmakers can find the ways to tackle this issue.
I don’t know why they are being so protectionistic.
Or maybe they are doing the right things for their own industry, they cannot stand there and watch the sales of Chinese cars keep increasing by 500% every year, and given their low prices, if Chinese cars stay for long, people will not be able to see even a single Russian car on the streets of Russia.
And is Russian market important for Chinese carmakers ?
Is there any negotiations going on yet between Chery (or any other Chinese carmakers) and the Russian government/authority ?
No, Russian market will only have at most 300million people (and not all of them will have cars). Chinese car driving market could be 1 billion (heaven help us), eventually.
But isn’t russian population 150 millions ? or lesss
Russian population is no more than 120 million, and projected to go below 100 in a decade or two. They now have days off for worker so they can go home and make “little patriots” LOL
Russia is not being protectionist - it’s just that the Chinese car makers didn’t offer enough bribes. Think about it, why only Chinese car makers getting the shaft and not the other majore car makers? Given the Russian gov being more corrupt than even the Chinese, it’s hard to imagine otherwise.
Well that question bugged me as well, why is it only Chinese carmakers ? And it is doing very well in Russia, annual sales increase exponentially, so that shows no signs of dissatisfaction from Russian consumers there. So why single out Chinese carmakers and not other carmakers as well, I could not figure out the answer and I came up with that hypothesis (the first post on this thread).
Maybe they are really being protectionistic given the cheap price of Chinese cars, it is very hard for Russian manufacturers to compete or probably there is hidden agenda.No need to badmouth Russia though, in the end of the day, this is the world of business and not everything is smooth and easy going.
SOK made a try at the Chinese market back in 2002, exhibiting its products, but I don’t know if it ever got approval to assemble those (Ladas?) or not.
Russian population is 145 millions and we have the fastest developed automarket in the world. In last years automarket growded 65-70%!
for dragin^
SOK made a try in China Izh-cars