The Brazilian port of Salvador has celebrated the arrival of the first shipment of vehicles from Chinese carmaker JAC Motors, which marks the beginning of operations in Bahia state for the company. Around 1,000 J5 vehicles were delivered in the shipment.

Previously, the manufacturer made use of the port of Vitoria in the state of Espirito Santo to import vehicles, which are offered for sale in the Brazilian market. Historically, JAC began exports to South America 20 years ago, beginning with Bolivia.

Its decision to switch forms part of an agreement signed with the state of Bahia involving tax incentives. In return, the Chinese manufacturer is to invest $454m to build a factory at Camaçari, in the greater Salvador area, which will start production in 2014.

JAC, like other carmakers imported from outside the Mercosur trade bloc and Mexico, has been hit by a 30% rise in import duties for its vehicles, increasing the impetus to produce cars locally. 

The incentives from Bahia fly in the face of a recent decision made by the Brazilian Senate, which earlier passed a resolution setting the tax rate for imported products at 4% as of 2013, whilst at the same time preventing the granting of fiscal incentives by individual Brazilian states to attract imports. Until the law, which aims to end the so called “war between the ports”, comes into force, states like Bahia have had to move quickly to take advantage of existing legislation, hence the incentive package offered to JAC Motors to change ports.

JAC signed an exclusive distributor agreement with Brazilian dealer SHC in 2010 for the movement of vehicles to the country, part of wider escalation of export activity from China to South America over the last two years. Last year the region took 280,000 Chinese made vehicles and pushed Asia into second place as China’s biggest export market. Of that total, Brazil took 100,000 vehicles, while smaller markets such as Venezuela saw a 10-fold increase in Chinese imports in just one year.