Chinese officials and automakers are examining German factories slated for closure, including those owned by Volkswagen, Reuters reports.
An insider familiar with the matter said buying the plants would allow China to reinforce its clout in Germany’s auto industry. Chinese companies have been investing in the industry in Europe’s first economy and now plan to establish car production there.
Any purchase of a major German plant could be a politically sensitive investment for China, especially against the backdrop of the global economic downturn caused by a troubled green transition and the Volkswagen crisis.
Producing cars in Germany for sale in Europe would allow Chinese EV manufacturers to avoid paying EU tariffs on electric vehicles imported from China. This could also pose an additional threat of competition with more expensive European manufacturers, as cheaper Chinese alternatives could squeeze out European companies.
However, such a move depends on the new German government’s stance towards China after the elections in February, according to experts. The current coalition is keen to reduce dependence on China, with Foreign Minister Annalena Baerbock labelling President Xi Jinping a “dictator.”
Volkswagen is exploring options for its Dresden and Osnabrueck plants as part of a cost-cutting campaign. Europe’s biggest carmaker, which owns such brands as Porsche, Audi and Škoda, has witnessed a drop in sales amid growing competition from Chinese companies.
Meanwhile, Chinese businesses voiced concern over how they would be welcomed by German trade unions, which hold considerable power on the advisory boards of German companies. The unions are demanding job security measures for German workers.
Many Chinese carmakers are seeking plant sites in Europe, the world’s second-largest market for EVs, to circumvent tariffs imposed by the European Commission last year. Chinese foreign ministry spokesperson said:
China has introduced a series of opening-up measures to create new business opportunities for foreign companies … It is hoped that the German side will also uphold an open mind, (and) provide a fair, just and non-discriminatory business environment for Chinese firms to invest.
Chinese investors have already inspected plants in Western Europe, including the opening of Ford’s new plant in Saarlouis, Germany, and Volkswagen’s Audi plant in Brussels.
