Great Wall Motors launched operations in Bulgaria on Tuesday, becoming the first Chinese automaker to assemble cars in the European Union.
At a ceremony in the village of Bahovista, the major Chinese sports utility vehicle maker said it will start with an initial production of 2,000 cars a year, with the output gradually rising to 50,000 annually by 2014.
The car plant, owned by Great Wall and Bulgaria's Litex Motors, will initially produce cars aimed at the local market. Future targets could include Macedonia, Albania, Montenegro and Serbia.
Great Wall officials said the aim is to gradually expand into other European markets. Since Bulgaria is a member of the European Union, the project provides Great Wall with access to other EU countries at zero tariff levels.
"We have to first meet demand in Bulgaria and the neighboring countries, but in the long term we hope that our cars made in Bulgaria can reach the European market," said Wang Fengying, Great Wall president and CEO.
She said that it could take three to five years to reach that goal, but affirmed that "stepping on the European market is our strategy."
The first two models being produced in Bulgaria — the Voleex C10 city car and the Steed 5 pickup — will cost euro8,000-euro12,500 ($10,565-$16,500).
The plant's executive director, Iliya Terziev, said that the number of workers at the 80-million-euro-plant will be gradually increased from 120 to 2,000 over the next three years. Next to the current assembling facility, where original Chinese car parts are put together by Bulgarian workers, construction is under way for a welding and painting facility.
"Our aim is to shift as much as possible of the operations to Bulgaria," Terziev said adding that local companies have shown interest in providing the plant with spare parts and car accessories.
The new car plant is part of Bulgaria's efforts to attract foreign investment needed to boost its crisis-battered economy, but also part of Asia's rising economic force's search for new export markets.
Earlier this month, the Chinese news agency Xinhua released a website in Bulgarian, offering news and analysis about the country — the second largest economy in the world.
Recently, Chinese wind turbine manufacturer Ming Yang Wind Power Group agreed to supply 125 megawatt equipment for two projects in Bulgaria.
In many countries across eastern Europe, governments have built active relations with China reviving ties that were forged in the Communist era.
Despite the downturn in the Romanian economy, Chinese business there has remained strong. Last July, a euro100 million ($132 million) complex near the capital, Bucharest, was inaugurated.
In Poland, the country's Deputy Prime Minister Waldemar Pawlak recently invited Chinese businessmen to invest in Poland saying his country was the best way for China to access European markets.
Trade between Poland and China reached $1.6 billion in the first three quarters of 2011, a 10-percent rise from the same period the year before.
Serbia and China signed an agreement on "strategic partnership" in 2009, paving the way for Chinese investment in the Balkan country. The two also have close political ties and Belgrade considers China an important ally internationally because it has not recognized Kosovo.
A consortium of Chinese companies is making plans with Serbia's power utility for a package of investments worth more than euro2 billion. China has started building a 1,500-meter bridge — according to local media to be called "Friendship Bridge" — over the Danube in the outskirts of Belgrade which should be finished in 2014.
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Alison Mutler in Bucharest, Romania; Monika Scislowska in Warsaw, Poland, and Jovana Gec in Belgrade, Serbia, contributed to this report.