(Ecofin Agency) - Chinese car manufacturer Beijing Automobile International Corporation (BAIC) will build a factory in an industrial zone situated in the Eastern Cape province, South Africa, for R11 billion ($823.30 million), the zone’s operator announced on August 18, 2016.

An agreement for the investment was signed between the Public Chinese Group and the Coega Development Corporation, which manages the Coega industrial zone.

“The size of this investment demonstrates confidence by China and confidence in South Africa as an investment destination. The investment is strategic and is a major project in terms of our bilateral relationship,” said Minister of Trade and Industry, Rob Davies.

Cited by the local newspapers Business Times, Lewis Lu, Development Director at BAIC said the plant should be operational by the end of 2017, and will have a production capacity of 100,000 units per year.

He added that its construction will be mainly financed by the BAIC group and Industrial Development Corporation (IDC), the South African agency which focuses on the development of the industry.

The Director of the South African Car Manufacturers Association, Nico Vermeulen, has estimated that the new investment will help achieve the goal of its authorities to produce a million cars per year starting from 2020.