Automotive Black Technology Chapter 502: : Prediction will lead to success, failure to predict will lead to failure.
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"Book of Rites. Doctrine of the Mean" says: Everything will be established if it is forewarned, and it will be ruined if it is not forewarned. If you make decisions beforehand, you will not be confused; if you make decisions in advance, you will not be stuck. If you are determined before you go, you will not feel guilty; if you are determined before you go, you will not be exhausted.
What do you mean by this?
To use the precise summary in Taizu's "On Protracted War", it is "Don't fight an unprepared war"!
Laying into the African market was not something Li Fanyu thought of immediately after seeing Hongguang. It was a decision made after careful consideration and a rigorous investigation by the group's marketing department.
In this decision, Li Fanyu divided the layout of Africa into two steps.
The first step is Egypt’s domestic market,
Egypt is a country with a history as long as China. This ancient country has a land of one million square kilometers and more than 80 million citizens. But compared with China, this place is simply not a place for people to stay; the whole country is dry and has a dry climate with little rain. Most of the country has a tropical desert climate, except for the Nile Delta and the northern coastal areas, which have a subtropical Mediterranean climate.
But regardless of the poor natural conditions, Egypt’s domestic policies for the industrial and automotive industries are quite relaxed; in this magical country, there are no mandatory emission standards, no mandatory scrap standards, and even the car failure recall system is very poor. .
Since there is no independent automobile industry in China, the looseness of automobile certification standards is as if there is no such thing!
For foreign cars entering Egypt, they only need a pre-shipment inspection report and documents certified by the embassy, and that’s it! thing! Got it!
Why is it so loose?
Because of the civil strife... Various political powers are vying for power. You will sing and I will appear on stage. Who the **** cares about the entrance and exit of your car?
Although things are getting better now, since 2011, the domestic turmoil has had a serious impact on the national economy. Therefore, even though it has relatively calmed down now, in order to resume production and increase revenue and reduce expenditure, the policy for automobile imports is still very loose.
In order to get rid of the nearly 10% annual inflation since 2011, the Egyptian government is now seeking international assistance from various sources to attract foreign assets to invest in the country to achieve the purpose of improving people's livelihood.
There is nothing we can do if we don’t improve. After five or six years of hard work, Egypt’s population below the poverty line has reached 25%. In other words, there are a quarter of the citizens here. Those who don’t have enough to eat...
But in today's world, no matter how poor your country is, the four aspects of food, clothing, housing and transportation are rigid needs. What is specifically related to Li Fanyu is that no matter how poor the Egyptian people are, they still have to have cars!
So, in order to solve the problem that it did not have cars but the people needed them, the Egyptian government formulated a tax policy that attracted car companies around the world; CKD 10%! 45% for CBU below 1.6L, 100% for 1.6L-2.0L, and 135% for CBU greater than 2.0L!
CKD represents the tax rate for auto parts and assemblies, and CBU represents the tax rate for complete vehicles!
In addition, there is a 15% consumption tax, which means nothing for car manufacturers.
That's right...compared to Li Fanyu's previous time and space, China's tax model of dutiable price plus tariff, consumption tax plus value-added tax is so conscientious...
The domestic regulatory authorities for the automotive industry are also extremely imperfect. There is only one "Egyptian Standardization and Quality Organization" called EOS for short.
However, please note that in Egypt’s existing legal system, there are no specific requirements for market access management of automotive products. Or what other procedures and technical standards, as well as laws and regulations.
In other words, there is almost no supervision!
But this weird country that doesn’t even have regulatory regulations has made one of the most attractive policies for the automobile industry in the world;
With the main orientation of "encouraging local assembly and promoting the development of parts manufacturing and automobile industry", as long as the parts are assembled locally in Egypt and 45% of the vehicle price is purchased in Egypt, you can enjoy a series of preferential packages .
This package includes; a 2%-12% reduction in import tax rates for parts and components. The government provides a 50% subsidy on logistics costs for locally assembled and re-exported automobile products, and a 10% fund rebate of the value of the exported automobiles!
This guy is just like an old madam whose girls are not patronized. He stands on the street and shouts to the men on the street: "Gentlemen, I beg you to come! 20% off on prostitution, it's over. Then I will give you 10% back and reimburse half of the travel expenses, dear!”
Not only that, the "One Belt, One Road" policy reached between China and Egypt stipulates that when Chinese companies invest in Egypt, they can also enjoy lower taxes and cabbage-price corporate land...
After seeing the information sent by the group marketing department, Li Fanyu was drooling.
With these policies in mind, and the fact that Hongguang was so suitable for the Egyptian market, Li Fanyu thought of giving him a shot. However, there was another reason that made him determined to insert Huaicheng Factory into Egypt.
That is, Egypt’s unique geographical location and fantastic international policies!
Let’s talk about geographical location first.
Egypt is located in the northeastern part of Africa, spanning the two continents of Asia and Africa. The north can reach Europe directly through the Mediterranean Sea. Therefore, in Li Fanyu's view, entering the Egyptian market can use this place as a springboard to reach Africa, Europe, West Asia, the Middle East and parts of the former Soviet Union. Added together, this is a very huge market!
There are many policies, in addition to the 50% freight subsidy, 10% capital rebate, and the discounts brought by the “One Belt, One Road” initiative. Egypt has a large population below the poverty line, so labor is cheap.
But important, more important!
Egypt and most African countries have concluded free trade agreements and established a common market - such as the "Common Market of Southeast Africa" referred to as COMESA.
The common market includes Egypt, Ethiopia, Burundi, Tipi, Zimbabwe, Comoros, Kenya, Rwanda, Malawi, Mauritius, Swaziland, Sudan, Uganda, Zambia, Namibia, Madagascar, and Eritrea , Seychelles, Congo and other nineteen African countries.
According to the regulations formulated by COMESA in 2009, low or zero-tariff trade preferences will be granted to each other for automotive products that achieve localized production ratios in the common market.
If you build a factory in Egypt, this trade preference can be triggered as long as the localized production ratio reaches 40%.
In other words, after the factory is built to produce cars and then enter COMESA as a member state, there is basically no tariff!
These member countries are also developing countries or even underdeveloped countries.
In these countries, low- and middle-income groups make up the majority, and their overall purchasing power is low. Due to the climatic conditions and road transportation restrictions in these countries, price and road adaptability have become the primary factors that residents consider when purchasing a car.
In Li Fanyu's view, these conditions are completely made for Hongguang!
Don’t go to Egypt to build a factory, and then slowly explore the African market...
I’m sorry for those black uncles waiting to be liberated!