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Volkswagen set to invest €14 bln in China

The Local · 18 Apr 2012, 12:39

Published: 18 Apr 2012 12:39 GMT+02:00

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The Handelsblatt reported on Wednesday that the €14 billion would be invested over the next four years – to enable Volkswagen to meet increasing Chinese demand.

Wen and Merkel will be at the VW plant in Wolfsburg, Lower Saxony on Monday to see the contract signed between VW and Chinese authorities.

The first new factory will be built in Urumqi, northwestern China, and will be capable of producing up to 50,000 cars a year, starting next year.

The factory, to be built in partnership with Shanghai Automotive (SAIC), will be the first foreign enterprise in a region that has frequently been the scene of unrest. Large numbers of minority Uigurs and Muslims live there and complain of government repression. Around 200 people died in riots there in 2009.

Last year Volkswagen sold 27 percent of its cars in China.

Wen’s visit to Germany is to celebrate 40 years of official relations between the countries. “The visit will further improve communication between both sides,” a spokesman for the Chinese Foreign Ministry said.

Story continues below…

China will also have a huge presence at the Hannover technology trade show, which Wen and Merkel will open together on Sunday.

The Local/DPA/hc

The Local (news@thelocal.de)

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Your comments about this article

14:29 April 18, 2012 by smart2012
This is for all of the people that said that German "high qualiy" stuff willl never be made in China... and more to come......
15:12 April 18, 2012 by catjones
When more of your products are sold outside the country of corporate headquarters, is the company still 'german'?
15:22 April 18, 2012 by reallybigdog

Yes! And it all counts as exports!
15:29 April 18, 2012 by Navigator_B
I doubt that much of the highly skilled work will be done in China, just the assembly and mass production. China will copy Germany just like Japan copied the USA after WW2, but German companies will stay ahead when it comes to the top of the range products.

Between Germany's highly trained workforce and China's huge supply of labour, there isn't really much need for anyone else in manufacturing in any other country, apart from people to dig the raw materials out of the ground to make the Chinese and German products. 
15:36 April 18, 2012 by michael4096
We had the quality debates in the UK & US in the early '70s - only then it was Japanese autos - we lost

Then again when VW bought SEAT and Skoda - we lost again

Anyone betting we won't get quality cars from China?
15:49 April 18, 2012 by smart2012
Have to comment about quality in China. and my answer is yes, u can get high quality in China... if they use high quality raw material (and they do not just make cheap stuff based on crap specification given by EU companies or US companuies). Some examples? lenovo (second biggest laptop producer in the world), I phone, most of high quality domestic appliances..

@ catjones: yes, it will still count as German export on numbers, but in germany there wioll be less and less productions.. which at the end will not help german normal guys...

@ navigator B: agree that high range of stuff will still be made in Germany, however volumes will be not at all comparable. plus part suppliers will also have to move to china, to be closer to the chinese factories.. so a big loss of jobs
19:37 April 18, 2012 by catjones
My comment was misunderstood....I meant 'where would the company allegiance be?' Just because the company is registered in DL doesn't make it a 'german' company.

As to the other wishful comments: China graduates more engineers each year than germany has in its employ. It won't be tomorrow, but not too soon thereafter when the world's R&D moves to the lower cost (China) countries as well.
20:01 April 18, 2012 by smart2012
I believe they will have to register the company locally, due to tax reasons. For the rest I agree with u catjones
21:17 April 18, 2012 by VIKINGAXE
If all Europen Manufacturing and R&D go to low wage economies Who will buy their goods in the West. The unemployed, part time minimum wage workers. I don't think so. It would be interesting to see how Western economies deal with this in the next 20 years. Has anyone got a time machine to see what happens.
03:51 April 19, 2012 by catjones
VIKINGAXE...I do. The emerging market countries will pick up the slack in euro sales and will become the dominant markets as well.
16:36 April 19, 2012 by reallybigdog
The Board of Directors controls all operations anywhere in the world directly from Germany. Top tier management for any foreign subsidiaries is hand picked by the the board to oversee and protect their investment. Germans remain in full control at all times and should considering the size of investment don't you think! The allegiance of the subsidiary is to the board period otherwise you're out!!

German companies over the years have also invested heavily in foreign automotive companies to counter competition. They invest in their competitors via work sharing, engineer consulting, part and component supply as well as specialized machinery and equipment production supply. German companies have been around a long time and have influenced many automotive developments as well as continue to be directly invested in their competitors so its a win win for the German car manufactures no matter what auto you buy. With this kind of industry expertise Its no surprise why they have such market dominance on a global basis where VW Group can allocate up to 50 Billion for expansion.
21:19 July 28, 2012 by zeddriver

That may be true "for now" Remember, We are dealing with a communist regime. All they have to do is kick the Germans out of the country and take over. And what could be done to stop it. hire a lawyer. BMW already has experienced that. In the form of a total copy of the X3 series SUV. When BMW sued. it of course went through the Chinese courts. What do you think the out come was. Courts said it wasn't a copy due to the name being different. By the west investing in China BEFORE they reform the government oppression. What makes you think that they have any incentive to change once we hand over our industrial base to them.
05:35 September 13, 2012 by honeybeee
Very agreed with above #11¦#39;s point of view , that¦#39;s really a win win situation for many german companies . Not only car company do that , car parts supplier also know the big profits of chinese maket to make good use of its huge market .

Here is the similar case with Volkswagen ,that¦#39;s the same german company Schaeffler Ag , they are developing with their great china vision planning , Dr. Juergen M. Geissinger, President and CEO of the Schaeffler Group, emphasizes the great importance of this investment: ¦quot;As one of the regions that enjoy the highest increases in business growth, China has made great contribution to the whole group. By establishing new factory in Nanjing, we will further expand the existing operation in China, strengthening our profile and presence in the Asian economic region.¦quot;

Nowadays , german and china have both much wanted to have promoted more reginal cooperations and reginal leaders have great support and same vision about it too , so the germany and china auto industry will have bright future to make more profound connections with each other.
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