07
DEZ
2023
The Volkswagen Group continues the comprehensive restructuring of its production of electric cars and will in future not only produce a new platform for several e-models in China, but also develop them there. The step initially has economic causes. On the one hand, the People's Republic is now well advanced in the electric car industry; it is a good idea to use this comprehensively for its own electric car production. On the other hand, work in China can be done more cost-effectively and also faster. Volkswagen is currently building a development center (Volkswagen China Technology Company, VCTC) at its plant in Hefei 500 kilometers west of Shanghai, in which the new electric car platform is to be designed. This will take only two thirds of the time that would be estimated in Europe and will only cause two thirds of the costs. Volkswagen is also moving production as far as possible to Chinese suppliers who charge lower prices; 95 percent of all purchased components are to be purchased from them in the future. The aim is to be able to produce electric cars in just a few years, which are competitive with a price between 18,000 and 22,000 euros. 1] Volkswagen wants to make up for its dramatic backlog in electric cars in China.[ 2]
In addition to economic and political reasons, the restructuring of production has also political reasons. With the shift of development to China and the far-reaching restriction to Chinese suppliers, Volkswagen's Chinese factories will be independent of Germany or Europe. VW China boss Ralf Brandstätter confirms: "We strive for an autonomous, controllable value chain." 3] This will enable the Chinese plants of the group to continue working independently in the event of an escalation of the Western economic war against the People's Republic - i.e. in the event of tightened sanctions or even decoupling: "in China for China", as it is said at Volkswagen.[ 4] The group will therefore be able to remain present in the world's largest car market under all circumstances. However, he may have to split off his Chinese business units and organize them independently. In Germany, the headquarters of a significantly reduced group would then be left behind: Volkswagen has recently sold 40 percent of its vehicles in the People's Republic. Extensive development activities are already being lost for Germany, which will be carried out at VCTC in Hefei in the future. Thus, the Western economic war against China, which is pushing Volkswagen to form autonomous production in the People's Republic, is damaging German industry.
The influential Bertelsmann Foundation already reported plans in the headquarters of large German corporations to split off their China business in an emergency about two years ago (german-foreign-policy.com reported [5]). Meanwhile, medium-sized German companies are also making preparations for this. For example, the fan and engine manufacturer ebm-papst says that they think "about worst-case scenarios" and want to organize production in China self-sufficiently so that it can be split off at any time in an emergency - in the event of an escalation of the economic war. 6] According to reports, other medium-sized companies are also taking identical measures. This involves costly investments. ebm-papst, for example, is currently investing around 25 million euros in its locations in China. This is worthwhile because of the huge Chinese market, which makes the Chinese business seem extremely attractive. Ultimately, China is "intracting more and more investments" because "the companies would have the feeling" that they had to be able to "isolate their China business," states Jürgen Matthes, an expert from the Cologne Institute of the German Economy (IW). 7] With regard to the fact that the federal government wants to move the economy away from China to other countries, this is "already paradoxical and thus not actually wanted". In addition, everything that is manufactured in China thanks to new investments is "not exported from Germany" - to the detriment of the German export industry.
Not only, but also for this reason, German investments in China are currently increasing rapidly. Already in 2021, the stock of German direct investment in the People's Republic had soared to 102.6 billion euros and had thus exceeded the mark of 100 billion euros for the first time. 8] In 2022, a further 11.5 billion euros were added; the total stock was already 114 billion euros. In the first half of 2023, new investments worth 10.3 billion euros were recorded, the second highest value recorded so far. 9] "Although the German economy as a whole invests much less additionally abroad, the new direct investments in China remain almost as high as before," states IW expert Matthes. This leads to the fact that the share of investments in China in total foreign investment is rising rapidly - to 16.4 percent. "The country has never been so significant in relation to the rest of the foreign countries," explains Matthes.
If the economic war continues to increase, companies in Germany are threatened with further disadvantages. For example, the West German bicycle manufacturer Rose Bikes reports that China has long been "indisistible for the bicycle industry" as a supplier. 10] If imports from China fell victim to sanctions or were made much more expensive by punitive tariffs or other measures, then there was a threat of serious slumps. Although the company is already striving for alternative suppliers from Europe. But it will take "a certain amount of time" to have "the quality at the level we were used to from Asia and China". In addition, recourse to components manufactured in Europe also costs more money at the beginning. At competitive prices, it will be possible to produce "at the earliest in eight to ten years" without Chinese suppliers, according to Rose Bikes. The situation is similar for numerous other companies that use preliminary products from China at their German locations. German imports from the People's Republic increased massively last year and reached a volume of over 191 billion euros, more than imports from any other country and much more than ever before.
[1] More Hefei, less Wolfsburg. tagesschau.de 24.11.2023.
[2] S. on this parade industry under pressure.
[3] Lazar Backovic, Sabine Gusbeth: Volkswagen is already planning the 20,000-euro car in China from 2026. Handelsblatt.com 28.11.2023.
[4] VW decouples China business from Germany. n-tv.de 24.11.2023.
[5] S. The Business Basis of German Industry (I) and The Business Basis of German Industry (II).
[6], [7] Julian Gräfe: China becomes a risk for SMEs. tagesschau.de 30.11.2023.
[8] Jürgen Matthes: German direct investment in China: Hardly any diversification. IW short report no. 35. Cologne, 17.05.2023.
[9] German corporations are increasingly investing in China. spiegel.de 20.09.2023.
[10] Julian Gräfe: China becomes a risk for SMEs. tagesschau.de 30.11.2023.