Huachen Automotive Group, the parent of Hong Kong-listed Brilliance China Automotive Holdings, aims to export 100,000 Zhonghua cars to Russia in co-operation with a Russian partner.
In order to preserve tax benefits for imported components associated with selling foreign cars, Huachen will provide parts designated as 'knocked-down kits' to partner Irito-Invest for vehicle assembly.
For the Russian market, foreign carmakers gain tax benefits by providing completely knocked-down kits - parts only for assembly - or in semi-knocked-down form. The latter applies to arrangements whereby only some of the parts are imported.
These arrangements are used to avoid high import taxes or to receive tax preferences for providing employment.
Russia is the second-largest export market for Huachen. The company last year announced the export of 158,000 Zhonghua cars to Germany, its first move to tap the western European market.
Huachen is the first mainland carmaker to announce an investment plan in Russia after reports had indicated that the government would subject foreign carmakers to tighter regulations on their plans for Russian plants.