﻿CHINESE CAR MAKER TARGETS MOROCCO AS AFRICAN HUB Auto manufacturers are betting on Africa as the
next growth frontier seeing high potential for growth andd they’re building a new production hub
to power it. In a rare industrialization success story for the continent,
some of the largest car makers have been transforming North Africa into the world’s newest
car-manufacturing cluster. With the capacity to produce over 700,000 vehicles per year, Morocco's
automotive industry is the undisputed king of vehicle manufacturing in North Africa. The country
is Africa's 2nd largest automaker trailing South Africa, and first passenger car manufacturer.
Foreign investment is encouraged by the Moroccan government.
The increasing investment from the leading automakers in Africa is fueled by incentives
offered by the government such as removing certain taxes so the that tax rate on companies
is 0% for the first five years and businesses are given a big break on value added tax.
Morocco has used the combination of low inflation and low-cost labour, generous tax incentives,
an improved transportation infrastructure as well as economic and political stability to
attract automotive companies. The average monthly wage in Morocco is less than €400, compared with
€2,000 in nearby Spain. Inflation has risen at a rate of 1.5% a year for the past decade.
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The Moroccan automotive industry is booming, attracting major industrial players, including
Renault-Nissan, PSA Peugeot-Citroën. Renault has already set up two car factories in Morocco,
and PSA Peugeot Citroen will begin producing cars near the coastal city of Kenitra in 2019. Most
recently China's BYD(Build Your Dreams) became the third car manufacturer to produce cars in Morroco
and Morrocan authorities believe that adding a fourth major auto plant before the end of
2021 with production slated to start in 2023 or 2024, will enable the country to meet its
goal of joining the top 10 vehicle-producing nations in the world in a few years and also
reaching a capacity of producing 1 million vehicles a year by 2025. At that level,
Moroccan officials estimate the country would rank among the top 15 vehicle-producing nations
in the world. In 2017,
Chinese electric car manufacturer BYD has signed a memorandum of
understanding (MoU) to open a factory that manufactures electric vehicles
near the Moroccan city of Tangiers. The MoU was signed at the royal palace
in the coastal city of Casablanca in the presence of King Mohammed VI and
BYD’s chairman, Wang Chuanfu, whose company is backed by US investor Warren Buffett.
The factory in the new Mohammed VI Tangier Tech City, which is part of a project between China
and Morocco, is to produce electric cars, buses and trucks at a 50-hectare site employing 2,500
people, according to the project directors. It will also produce batteries at the new
site but likely import cells from its established suppliers in Europe or bring them from China. A
plant for the assembly of electric trains is also planned,
but the amount of investment and timeframe of the overall project were not announced.
Morocco's “first in North Africa” electric car production could provide the kingdom and
its European partners first-mover advantage in the expanding car markets of Africa's rapidly
urbanizing regions south of the Sahara. The country’s Tangier Med Port is already capable of
handling 1 million vehicles a year. In addition, a high-speed rail line between Tangier and
Casablanca was set to become operational in 2018. Chery’entry into Moroccan automobile market
signals growing Chinese presence. Chery Automobile is a state-owned automaker headquartered in Anhui.
Founded in 1997, Chery primarily manufactures gas-powered cars, minivans, and SUVs. However,
it was the second automaker in China, behind BYD, to transition to electric vehicles,
churning out its first model in the early 2000s.
It began investing heavily in the industry by 2011 and now has 10 pure electric models.
Chery is the latest of many increasingly prominent Chinese companies that have put
their sights on the African market, and on Morocco in particular.
With over 20 years of experience in developing and manufacturing passenger cars in China and abroad,
Chery is hoping to establish and build a thorough automotive ecosystem in Morocco,
a company representative told Morocco World News. The Chinese company plans to enter the
Moroccan market on all fronts, bringing with them traditional fuel-powered vehicles, neighbourhood
electric vehicles (NEV), hybrid models, as well their most recent self-driving cars.
The automotive sector exports went from MAD 14.7 billion to almost MAD 65.1 billion
at the end of 2018, which is an increase of 14.5% per year. Fitch Rating's automotive department
forecasts the sector to grow at an average annual rate of 17.5% between 2020 and 2025.
Morocco's automotive industry has become the country's leading exporter. 2019 export revenues
stood at $10.5 billion, i.e. 25% of Morocco's total exports. The Moroccan automotive industry
in 2019 comprises over 250 companies, creating over 148,000 direct jobs (in the 2014-2019 period)
and producing in excess of 400,000 vehicles with a local integration rate of 60%. Morocco today
counts four main integrated industrial hubs (Tangier, Kenitra, Rabat and Casablanca) as
well as four specialized training institutes. There are also growing ties between various
Chinese companies and African governments in the fields of innovation, technology, and economy.
One such example is the Mohammed VI Tangier Tech City, where Morocco is
partnering up with several Chinese state-owned enterprises to build Morocco’s very first
“smart city.” The Tangier smart city, projected to be built on a 2000-hectare site, is designed to
be the peak of technological innovation to host a variety of local and foreign tech companies.
Approximately 200 Chinese companies coming from the automotive, aerospace, electronics, and
machine tool industries have made plans to set up in what some observers have described as the city
of the future. Set to be complete by 2027, the project will also help create up to 100,000 jobs.
Exports from China to Morocco reached $4.47 billion (MAD 39.51 billion) worth of goods in
2019, most of it being broadcasting equipment worth about $278 million (MAD 2.5 billion),
according to OEC. Compared to 1995, when China's exports to Morocco were $153
million (MAD 1.4 billion), the figures have grown at an annual rate of 15.1%.
Morocco's exports to China reached $485 million (MAD 4.3 billion) in 2019,
mostly consisting of raw copper, at $50.8 million (MAD 449 million), Calcium Phosphates,
which reached $43.3 million (MAD 384 million), and zinc ore worth $41.3 million (MAD 365 million),
according to the same source. The sizable trade deficit between the
two countries suggests that there is still space for Moroccan companies to establish
themselves and benefit more from the rapidly growing China-Morocco exchanges. Meanwhile,
developments and bilateral trade between the two countries in the last decade have been especially
forward-looking, with much talk and business concerning the tech sectors specifically.
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