CHERY Automobile Co Ltd and Great Wall Motor Co Ltd have suspended plans to make cars in Russia, where tightened rules will cut favorable tariffs for foreign carmakers.
Russia is planning to revoke the duty-free status of imported auto parts to prevent foreign carmakers from assembling vehicles in the country, according to Russia's Vedomosti newspaper.
Chery signed an agreement with the private Russian carmaker Avtotor in November to build a factory for its A-21 vehicles in Russia. The project, designed to produce 150,000 units a year, has now been frozen, according to the newspaper.
Great Wall, China's largest maker of sport utility vehicles, failed to get government approval to set up a manufacturing plant in Russia, where it planned to invest US$70 million, said Great Wall spokesman Shang Yugui.
"We are still actively negotiating with the local government as the policy would reduce our price competitiveness," he said, adding the wholly owned nature of the investment may be another reason for Russian concern.
The Russian move marks the second time Chinese carmakers have been barred from setting up plants in overseas markets.
Chery also delayed plans to make cars in Malaysia after the government asked it to export 80 percent of the vehicles assembled there.
China's vehicle exports surpassed imports for the first time over the decade, taking advantage of inexpensive labor costs.