The plan of building an industrial cluster of automobile begins to take shape with largest size of investment in areas between eastern Chongqing and western Hubei Province. With three auto businesses including Hebei Zhongxing Automobile Co., Ltd (ZX AUTO), Guangzhou Automobile Group Co., Ltd (GAG Group), as well as China Auto Parts Industry Company (CAPIC) successively settling down in Yichang, it will not only quicken the pace of building the National High-tech Development Zone (NHDZ) in Yichang into an industrial cluster of automobile, but also marks the beginning of capacity to produce automobiles and auto parts within the confine of the NHDZ in Yichang. The industrial cluster of automobile in turn can give rise to the far-reaching “magnetic field effect”— accelerating reaching the goal of turning the auto industry in Yichang into an industry with output value of 100 billion RMB and laying down the direction for the development of auto industry chain toward the upstream and downstream of the Yangtze River.

In spite of its reputation as the pillar industry and the leading industry in Hubei Province, the auto industry in southwestern Hubei Province has long been associated with narrow industrial base and lack of competitive advantage, which has become the reasons of “imbalance” in auto industry in Hubei Province. In the context of rapid expansion of auto industry in Hubei, Yichang City should not be lay behind. Judging from this situation, Yichang Municipal Government and Party Committee instruct that Yichang should be integrated into the “Automobile Industry Corridor” in Hubei Province, together with auto cities like Wuhan, Xiangyang and Shiyan, by means of actively initiating the auto industry.

In 2010, two major projects were eventually launched in Yichang in succession through arduous negotiation with Yichang Yangtze Gezhouba Automobile Co., Ltd and ZX AUTO, including the project of Yangtze Commercial Vehicles Auto Industrial Park with investment of 2 billion RMB and the project with annual output of 200 thousand SUVs respectively, which set out the journey of building the National High-tech Development Zone in Yichang into an industry base with output value of 100 billion RMB. It is said that one project of the manufacture of autos may lead to the development of auto parts industry with an increase of six to eight times, whereas each newly-increased employment opportunity in auto industry can result in seven more job opportunities which are to be created in related industries. So the issue like how to quicken the pace of transforming the National High-tech Development Zone in Yichang into an industrial cluster of automobile, extending the auto industry chain with the help of ZX AUTO almost always becomes the hottest subject in every meeting of the Administrative Commission of the NHDZ in Yichang.

In July, 2012, when news came to the CEO of ZX AUTO that GAC Changfeng Motor Co., Ltd, which is subordinated to the GAG Group, readily transferred its assets of CP2 Cars on which they had worked for four years with R&D costs of 1.089 billon RMB, he suggested an idea to Yichang Municipal Government that they should work together to introduce the project into Yichang. And the answer to the suggestion was affirmative since the administrative staff of the NHDZ in Yichang realized that it would be a golden chance to turn the National High-tech Development Zone in Yichang into an auto industry base with output value of 100 billion RMB. Meanwhile, they put forward the auto industry shall grow in step with the development of auto parts industry simply because the latter is the foundation of the former. And that is why they also attached much importance to the cooperation with CAPAC after introduction of GAG Group and providing help for ZX AUTO, for only by extending the industry chain with the manufacture of cars as core operation and simultaneously no neglect of the work of auto parts industry and auto accessories industry, can we hopefully bring about the clustering effect.

Yichang Municipal Government and Party Committee have always paid great attention to the progress in negotiation with GAG Group, CAPIC as well as ZX AUTO when listening to the briefing. They themselves more than once took part in the negotiations with parties concerned and brought forward their opinions. And it is worth mentioning that executives from related parties including GAG Group, CAPIC as well as ZX AUTO gathered in Yichang to continue their second round of negotiation lasting from December 11 to 18, 2012, during which they happily reach an accord on related pacts, such as transfer of assets of CP2 Cars from GAC Changfeng Motor Co., Ltd to ZX AUTO, cooperation contents of installment of CP2 Cars production line in Yichang, and implement and safeguard clauses, and ultimately on December 18, they signed five agreements like Memorandum on Cooperation between Yichang Municipal Government and GAG Group as well as ZX AUTO at Taohualing Hotel.

If as expected, the first CP2 Car will come off the production line at the end of this year, it surely leads to the formation of industrial chain of the manufacture of cars and auto parts, which may fulfill Yichang people’s dream of manufacturing SUV and CP2 at the same city. In the meantime, an industry base of auto parts will be established in Yichang with investment from CAPIC, and by then an auto parts industrial cluster covering three sections, namely, the R&D and inspection of auto parts, the R&D of new energy automobile and the sales market of cars and auto parts will come into being with annual sales proceeds of over 100 billion RMB. It has been estimated that by 2015, more than 60 percent of auto parts will be directly procured from Yichang for the manufacture of cars.

That many famous automobile groups like GAG Group with their well-known car brands choose to move into the National High-tech Development Zone in Yichang will give a boost to the formation of industrial chain of the manufacture of cars and auto parts in a short time in Yichang. Moreover, it is of strategic significance for the auto industry in Yichang to expand its scale, enhance its core competitive power, and what’s more, to further consolidate and strength Hubei auto industry’s position and function in China. (Correspondent Chen Xiaojun)