The Chai Tai Group, which is the investment arm of Charoen Pokphand (CP) in China, has spent more than Bt1 billion to open a new motorcycle manufacturing plant in Guangzhou, in order to serve rising demand from the lucrative local market.

Chai Tai senior vice president Thanakorn Seriburi said the plant - which will include the latest manufacturing technology, to ensure high quality - is expected to be operating next year.

The new factory means the company will produce motorcycles from three plants in China: two in Guangzhou and the third in Louyang, Henan province.

By the end of 2009, it expects to be producing 3 million motorcycles annually - a million from each of the three plants. At present, it produces 500,000 units annually at Louyang and 600,000 at its first Guangzhou plant.

Motorcycle manufacturing is a turn-round for Chai Tai, which sold a motorcycle plant in Shanghai during the 1997 economic crisis because of both manufacturing and marketing difficulties caused by local government restrictions.

Thanakorn said that in a recent announcement, China's government ranked motorcycle production as one of the country's top five industries. China is now the world's biggest motorcycle-maker, producing 15 million bikes per year. Four million are exported.

As well as conventional motorcycles, the Chinese government is encouraging the use of electric motorbikes, in order to reduce pollution. Total production of the electric bikes is about 10 million units annually, with a retail price of only 2,000 yuan (Bt9,300) per unit.

The CP Group is also expanding its retail business in China through its flagship Lotus-brand superstores.

Despite a shortage of retail workers, the company plans to open its 100th outlet sometime next year. At present, it operates 74 Lotus stores throughout China.

Thanakorn said that the company joined with educational institutions in Shanghai last year in developing a special retail business course, in a bid to increase its employee numbers.

More recently, Thammasat University and Shanghai International University have collaborated in creating a Thai language course for Chinese students. The course will take four years, teaching students to read, write and speak Thai.

"Our chairman, Dhanin Chearavanont [of the CP Group] focuses on the group's retail business in China, which he closely monitors and manages by himself," said Thanakorn.

CP has also entered the property-development business by building and opening the Super Brand Mall in Pudong, Shanghai's economic zone. It is one of the biggest shopping complexes in Asia.

CP's other business interests in China include agri-business and aquaculture, from feed meal to finished products.

"The Chinese are adopting a more Western lifestyle, and there's a rising demand for finished products," said Thanakorn, adding that CP's business empire in China was expected to grow an average of 15 per cent annually.

Achara Pongvutitham

The Nation