Zuma in the China shop

President Jacob Zuma moved to ease concerns among Chinese investors yesterday about the strike in the steel and engineering sector.

Speaking at the unveiling of a R600-million vehicle assembly plant at Coega, in Eastern Cape, Zuma said there was "no cause for alarm" despite violence flaring at several sites over the past week.

More than 200 000 members of the National Union of Metalworkers downed tools on July 1, costing the industry an estimated R300-million a day.

With as many as 10000 businesses in the sector affected, vehicle manufacturers are now eating into their stockpiles.

Zuma said the government was "well aware" of the strike and would "always act against those who use violence and intimidation to further their cause".

The president was speaking as Chinese manufacturer FAW produced its first commercial vehicle at its newly unveiled plant at the Coega Industrial Development Zone.

FAW, which has been manufacturing in China for six decades and selling in South Africa for 20 years, plans to follow the commercial vehicles with truck bodies.

After manufacturing 5 000 trucks a year, FAW has set its sights on making 30 000 passenger vehicles, Trade and Industry Minister Rob Davies said at the ceremony.

The minister called FAW's plant "the largest single value-added investment by a Chinese entity in South Africa to date".

His department is now working to extend the incentives for passenger vehicle makers to commercial vehicle manufacturers. This includes a tax-free allowance of 20% of the investment.

This could rise to 30% if certain conditions are met.

FAW SA CEO Yusheng Zhang said the company had looked past the current labour environment and focused on the country's infrastructure instead.

"We could have gone to Kenya, or Tanzania, where FAW has been present in sales and service for over 30 years, but we chose South Africa because of the infrastructure.

"It came down to a choice between East London and Coega," said Zhang.

Zuma said the investment would create much-needed jobs.

FAW said it would create about 400 jobs.

"Our target for this year, excluding exports, is 900 units, which is 80% more than what we sold in 2013," said Zhang.