Chinese firm, Chery Automobile, has reached an agreement for the construction of a plant in Brazil. The deal was appended to in a memorandum of understanding with the Brazilian state owned Investe Sao Paolo, controlled by the Sao Paolo state. Investe Sao Paolo chairman, Mario Mugani Jr signed the agreement for the set up of the manufacturing plant at Jacerei, situated about 80 kilometres from the city of Sao Paolo.

Present at the signing was Chery Automobile chairman, Yong Tongyue, who termed the agreement as a “vital step towards a Brazilian venture.”  When the project commences, Chery Automobile will undertake the first phase that entails the investment of $134 million, targeted at the production of around 50,000 vehicles annually at the start of operations. With the first round of investment, the project is expected to create around 5,000 jobs for the domestic populace, said the firms.

However, Chery Automobile’s investment is expected to sum up to $400 million, with a resultant capacity that will see it manufacture about 150,000 vehicles per annum and result in the creation of around 3,000 direct jobs. Chery Automobile’s Brazilian investment comes in the wake of agreements that Investe Sao Paolo played the crucial role of a coordinator between the public and the private sector.

Investe Sao Paolo has been at the center of organizing the operations of the parties involved, such as the public service providers of energy, gas, water and transport. Other than these, Investe Sao Paolo has as well been behind the logistics, conditions of the facility, human resources and the consumer market.

Chery Automobile’s foray in the state of Sao Paolo was motivated by the State Vehicle Manufacturer Investment Incentive Program that details suspension of payment of the tax on circulation of goods and services for the acquisition of goods, equipment and parts. Chery Automobile was established more than a decade ago and begun its Brazilian venture last year, after undertaking several studies that evaluated Brazil’s nature as an impressive and prospective market for its operations and business.

The Chinese firm is headquartered in Wuhu, China and currently owns units in 15 countries, manufacturing 17 models. It employs about 22,000 employees all over the world, and has an annually manufacturing capacity of 650,000 engines and 400,000 transmissions. Sao Paulo Agency for Promotion of Investment and Competitiveness – Investe São Paulo – coordinates public and private bodies in order to attract new national and international investments to the state.