Proton goes for China's low-cost base

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Proton goes for China's low-cost base

Proton goes for China's low-cost base

Saturday, October 22, 2011
  • jib
Najib addresses participants of the expo.

NANNING: National car-maker Proton Holdings Berhad is not only looking at expanding its presence in China with a new partner in Beijing-based Hawtai Motor Group Ltd.


As Proton chairman Datuk Seri Mohd Nadzmi Mohd Salleh puts it: "Basically it's not a typical kind of joint venture. It's a cooperation that covers many areas.


"We are looking at the low-cost base of China. We should capitalise on that. In Malaysia it's difficult for us to achieve economies of scale because of our low economic volume.


"Coming to China is where we can leverage on their low-cost base, especially on the component industry, which is very important because 70 to 75 per cent of the cost of a car comes from its components," he said.


On Friday Proton exchanged a memorandum of understanding (MoU) with Hawtai Motor at the roundtable dialogue between Prime Minister Datuk Seri Najib Razak and Chinese CEOs.


Speaking to Malaysian journalists covering the 8th China-Asean Expo here, Nadzmi said the MoU would culminate into a definitive agreement in about 90 days and during the period both parties would study how the cooperation would take place.


"We are talking about product collaboration. Immediately our (Proton) Saga is ready to come to China, followed by the Exora and also our new model that we will make available for this collaboration with Hawtai," he said.


Proton Group Managing Director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir said both parties were still discussing whether to use the Proton brand or Hawtai brand in pushing its cars into China, but more importantly was Proton's plan to have access to a low-cost manufacturing base.


"What we look forward to is one day to get our cars produced in China. From there we can export out to other left-hand-drive markets, for example, the Middle East.


"The production cost will be much more competitive. This is one of the big objectives we want to have.


"We can't rely on Malaysia to export left-hand-drive vehicles. We can use China as a base and because they have a big volume here and our partner will provide us with the facility, knowledge and infrastructure," he said.


Syed Zainal Abidin said Proton products in the C and B segments would complement Hawtai Motor's 4X4 vehicles and D-segment sedans.


On Youngman Automobile Group,Syed Zainal said: "Our relationship with Hawtai is complementing our existing relationship with Youngman. We'll continue to support Youngman based on our current business arrangement.


"Youngman is a straight forward licensing agreement. Hawtai is a different arrangement altogether, a different platform, so this by no means would conflict our relationship with Youngman."