Great Wall Motors admits losing $47 million in commercial dispute in Russia

Great Wall Motors admits losing $47 million in commercial dispute in Russia


 

globaltimes.cn.- Great Wall Motors – GWM, one of China’s top carmakers, has admitted a huge loss in a commercial dispute in Russia, but it claimed that this was an isolated incident that won’t have any impact on the company’s plans and operations in the country.

Responding to recent reports that GWM was defrauded of $58.4 million by a Russian distributor, the company issued a clarification on Tuesday, saying that it had recorded 323 million yuan ($46.9 million) of bad debts in 2017 arising from a commercial dispute with Russian car dealership.

The amount was equivalent to 0.33% of GWM’s total revenue in 2018 and 6.32% of its profit that year. The commercial dispute will not influence GWM’s operations in Russia, and Great Wall Motors will fully defend its legal rights and interests. GWM believes Russia’s judicial authorities will give fair treatment to the case, read the note.

The note said that since October 2014, Russian distributor Irito had failed to pay a total of $48.44 million to GWM due to devaluation of the ruble. GWM filed a suit in October 2015, demanding that Irito subsidiary IMS pay the money, but a local court dismissed the appeal, saying that IMS had filed for bankruptcy. GWM’s further appeal in 2018 has not received any response from the local court.

Russia is an essential part of GWM’s global drive. It recently announced that it had completed construction of its plant in Russia’s Tula region, which attracted lots of attention.

“I believe our globalization strategy has the potential to go beyond opening international markets, it will propel Haval – a sport utility vehicle brand of GWM – to be a key player on the global auto stage,” Wei Jianjun, chairman of Great Wall Motors, said in June when the $500 million facility finished construction.

For Chinese auto brands, Russia’s market size and consumer demand are attractive. Chinese brands can also approach Eastern European countries by establishing plants there, said Zhang.

Tags: GWM, Haval