- Source tells Reuters China wants to builds influence in prized auto industry
China is said to be eyeing up German unwanted car factories, in a bid to grow its influence within the heart of European manufacturing.
Chinese officials and automotive industry players are reported to be particularly interested in buying Volkswagen sites, a source revealed to Reuters.
The source, which Reuters says has knowledge of Chinese government thinking, said that buying a factory would allow China to build influence in Germany’s prized auto industry, home to some of the oldest and most prestigious car brands.
This follows rumours that Chinese EV manufacturer Nio is in talks to buy Audi’s Brussels factory, which will close by the end of February.
Audi took the ‘painful’ decision after unsuccessful efforts to find a buyer for the 375,000 sq.ft vehicle-making plant. However, Nio CEO William Li has denied the claims.
Volkswagen, which owns Audi as well as Skoda and Porsche, is considering closing three of its manufacturing plants following a series of cost-cutting measures which have seen salaries cut and thousands of staff laid off amid an electric car sales slowdown.
Chinese officials and automotive industry players are said to be interested in buying German automotive factories, especially Volkswagen sites, a source revealed to Reuters
If Chinese players do indeed go ahead with the purchase of German factories, it would be the latest step in China’s expanding investment in Europe.
While Chinese industry giants have already invested in everything from telecommunications to robotics, they have yet to set up car manufacturing there.
This move – which the source says would hinge on the new German government’s stance towards China after the election in February – would cause political ripples, especially as Volkswagen is the world’s largest automotive manufacturer.
Since its 1937 founding, VW has been a symbol of German industrial might and innovation.
The threat to European automotive from China
If Chinese companies successfully buy German factories it could create political tensions
In July the European Union hiked import tariffs on Chinese electric cars, despite the threat of moves triggering a trade war.
New additional duties on individual manufacturers range from 17.4 per cent to 37.6 per cent. These were added on top of the existing 10 per cent tariffs already in place on all EVs arriving from China.
The move is set to increase the price of cheap Chinese electric cars, especially popular MG models, due to its parent company SAIC being subject to the highest duties of all, which now total almost 50 per cent.
However, if China’s EV makers snap up German factories and start building cars in Germany it will allow them to avoid paying EU tariffs on imported EVs, and massively threaten European competitiveness.
Bids are expected to come from private firms, but Chinese authorities reserve the right to approve certain investments abroad and are likely to be involved in any investments from the early stages.
If so, this could increase tensions between the two countries as a German foreign office source told Reuters China has evolved to become a systemic rival.
