Will Chinese automakers invest in Türkiye after tax exemption decision?
China-based electric vehicle manufacturer BYD surpasses its US rival Tesla with its sales in the last quarter of 2023 and becomes the world leader in this field, January 3, 2024. (AA Photo)
Türkiye has exempted Chinese automobile manufacturers with investment incentive certificates from an additional 40% tax. So, what changes will occur in the plans of Chinese firms regarding Türkiye after this decision? Cardata’s General Manager Husamettin Yalcin evaluated the matter for Turkiyegazetesi.com.tr.
Last month, a new regulation was made regarding the decision to impose an additional 40% tax on Chinese-origin vehicles. With the Presidential decision published in the Official Gazette, the import of Chinese-origin automobiles with an investment incentive certificate will be exempt from the implementation. Following the decision, it is expected that Chinese manufacturers will invest in Türkiye, with the first news coming from BYD. BYD officials announced that they will make a massive investment in Türkiye. It is said that BYD will announce a factory investment of 1 billion dollars on Monday.
What is the plan for Chinese companies?
The plans of Chinese companies regarding Türkiye became a matter of curiosity after the decision. Cardata’s General Manager Husamettin Yalcin evaluated the matter for Turkiyegazetesi.com.tr. Here are the questions we asked Yalcin and his answers:
Does the decision cover firms that later receive an investment incentive certificate?
According to the current information, firms with an investment incentive certificate are exempt from the additional tax. However, it is not yet clear whether the decision will cover firms that receive the incentive certificate later. Generally, incentive policies may vary and can be expanded over time. Therefore, it is important to follow the details of future decisions. The answer to this question depends on how the decision will be expanded in the future. The current decision covers firms with an investment incentive certificate, and the process and conditions for obtaining this certificate may change in the future. To get a clear answer on this matter, it is necessary to follow the official statements of the relevant ministries or institutions.
Will this incentive encourage Chinese firms to invest?
Such incentives generally encourage foreign firms to invest. Exemption from the additional tax can positively affect the decisions of Chinese firms to manufacture in Türkiye by providing a cost advantage. These incentives allow Chinese firms to gain a competitive advantage in the Turkish market.
What advantages will Chinese firms gain by investing in Türkiye?
Chinese firms investing in Türkiye can gain the following advantages:
- Cost advantage with exemption from the additional tax
- Easy access to European, Middle Eastern, and African markets due to Türkiye’s geographical location
- Access to a large domestic market
- Opportunity to benefit from Türkiye’s various free trade agreements
- High-quality workforce and favorable production costs
Which Chinese manufacturer do you think will act faster to invest in Türkiye?
Among the most important Chinese brands that could invest in Türkiye are Chery, SAIC, BYD, and MG. To predict which brand might act first in investing in the Turkish market, it is useful to look at their current strategies and global expansion plans.
CHERY
Already a recognized brand in Türkiye, it can quickly invest due to its existing market recognition and past experiences.
SAIC
Being a larger brand, it can quickly enter the Turkish market with its extensive financial resources and global expansion strategies.
BYD
As a pioneer in electric vehicle technology, BYD can make a quick investment decision by evaluating the growth potential of Türkiye’s electric vehicle market. It is expected that they will soon make an announcement about an investment in Türkiye.
MG
Active in the Turkish market recently, MG can grow rapidly in the market with its affordable electric and hybrid models and might be at the forefront of making an investment. There has been a similar statement from the brand’s Türkiye president recently.
The strategic plans of the brands, government policies, and market conditions will determine which one will invest first. However, considering the current incentives and the potential in the Turkish market, it seems more likely that Chery will take the first step due to its existing experience and recognition. I think following the developments and official announcements in these matters will help obtain clearer information.
‘It may increase appetite of Chinese companies to invest’
There is no clear information on whether the decision will cover firms that later receive an investment incentive certificate. However, it is generally stated that firms with an incentive certificate are exempt from additional taxes. Therefore, it is believed that new firms receiving the investment incentive certificate can also benefit from this exemption.
This investment incentive decision may increase the appetite of Chinese firms to invest in Türkiye. Tax exemption will provide a significant cost advantage to Chinese firms considering manufacturing in Türkiye. This situation becomes attractive, especially for brands that want to strengthen their presence in the Turkish market.
Chinese firms investing in Türkiye can gain the advantage of selling to the European Union without additional customs duties, besides being exempt from additional taxes. This allows firms to increase their competitiveness and take a more aggressive position in the market.
Among the major Chinese brands like Chery, SAIC, BYD, and MG, predicting which one will take the first step to invest is challenging. However, according to current developments, it is mentioned that Chery and BYD are in more advanced stages of discussions regarding investment in Türkiye. Especially, it is known that BYD is considering establishing its second factory in Europe in Türkiye. Therefore, I can say that Chery and BYD might move faster.
