NIO was regarded as the spearhead of Chinese EV expansion into Europe. Its luxurious showrooms in cities such as Hamburg and Berlin testify to this. And indeed, the glossy exhibitions have no shortage of visitors keen to catch a glimpse of their modern cars. The only problem is that nobody wants to buy them.
In 2024, NIO only sold 398 cars in Germany. Bureaucratic hurdles, a direct distribution that takes some getting used to, and a generally skeptical EV market are to blame, analyzes Christian Domke Seidel. What remains is the realization that Chinese EV brands need a lot of endurance if they want to be successful in Germany.
Meanwhile, a reform of the Chinese healthcare system has sparked heated debate. The government has severely restricted the availability of branded foreign pharmaceuticals in public hospitals. Yet many citizens doubt the effectiveness of domestic generic alternatives and are concerned about whether they will only receive second-class medical care.
But the reform is not all bad, writes the author of our “China Perspective” column. As patients in the public healthcare system generally have to bear part of the medication costs themselves, cheaper prices also benefit lower incomes.
Your Fabian Peltsch
Feature
NIO: Why the Chinese EV brand needs a lot of perseverance in Germany
William Li, CEO of Nio, with the first model of Firefly, the new subsidiary brand in the entry-level segment.
The NIO-House in Hamburg is located in one of the premium shopping streets on Jungfernstieg, between boutiques for luxury brands and jewelers – with the Scandinavian-designed showroom on the first floor flooded, the café with children’s corner and rental offices on the upper floor.
If you listen to the executives talking about the Chinese manufacturers’ prospects in Germany in this exclusive atmosphere, you might get the impression that NIO is just about to take over the EV market. Especially as the fledgling company from Shanghai, which has only been building vehicles since 2016, had no other plans than to grab a big slice of the market when it expanded into Germany in 2022.
But the reality is far from that: In 2024, NIO sold only 398 cars in Germany. This is not only very low, but also 71 percent less than in 2023. The challenges that NIO faces in Germany are emblematic of the differences between the German and Chinese markets. Traditional customer business in car dealerships on the one side, new ideas such as direct sales on the other. NIO has felt how difficult it is for German customers to break with their habits.
Lengthy bureaucratic processes
David Sulzer, the new General Manager of NIO Germany, is aware of the situation: “Of course we are not satisfied. I came here to bring NIO forward.” And not everything has to do with sales. Another issue is lengthy approval processes. Leasing or vehicle approval processes, for example: In Germany, this involves complex damage assessments and residual value estimates and takes time. The German authorities also initially seemed overwhelmed by NIO’s business model – swapping batteries instead of charging them has so far not been part of the German process regulation.
Does the Chinese car manufacturer have the proper strategy and sufficient financial reserves to turn things around? Sulzer draws optimism from some partial successes. The company managed to cut key bureaucratic knots.
The difficult matter of swap station
NIO achieved its first partial success with vehicle registration documents. Nio operates battery swap stations. However, owners of a small 75 kWh battery could not use these stations until now because they would be given a 100 kWh battery. These are heavier and would change the vehicle’s curb weight, meaning that the vehicle registration document would contain incorrect information. But the problem has been solved and NIO has received the necessary approval.
The second problem lies in the swap stations themselves. Germany has no regulations for them. The manufacturer first had to obtain special permits. There are now 19 such battery swap stations in Germany. However, the manufacturer is still a long way from a nationwide network. Rapid progress in fast charging also casts doubt on the viability of this expensive infrastructure. China now has more than 3,000 swap stations. Here, NIO formed a battery swap alliance, which several manufacturers have since joined, including the state-owned company FAW, South China’s largest car manufacturer Guangzhou Automotive, Changan Automobile, Geely Holding, Chery and Lotus.
Weak EV market weighs on NIO
On top of bureaucratic hurdles, there is now an acute sales problem. NIO’s cars certainly generated interest, with 600,000 guests visiting its showrooms in 2024. But only very few bought a car. It is the continuation of a crisis that has already led to personnel changes in the past. In late 2023, Marius Hayler took over the business in Germany after achieving good results in the EV country of Norway. However, he left the brand in the summer. Sulzer is now supposed to bring continuity and sustainable growth.
As the new General Manager explains to Table.Briefings, the current slump needs to be seen in perspective. “We started in 2022 when there was a lot of hype about electric cars. Now we’ve come back down to earth – like all manufacturers. We expect to see a genuine increase in numbers after the consolidation phase in 2025.”
The German Manager Magazin reports that NIO even plans to change its entire sales structure – away from direct sales and towards a dealership network. Despite the popularity of its modernly designed showrooms, many German customers prefer to go to their trusted dealership. According to experts, there is no way around this distribution form in Germany. After the initial launch difficulties with the core brand NIO, the company seems to have recognized this. At the very least, it is currently looking for an importer for its Firefly brand.
Conceivable change to the sales model
The German market is prestigious because foreign brands struggle to conquer it. Skepticism towards Chinese manufacturers still prevails, although young customers tend to be open-minded – if the price is right. If not profits, Sulzer will have to present a clear and positive development. For cost reasons, Lihong Qin, NIO’s number two, already had to postpone expansion into markets such as Belgium, Switzerland and Austria.
Germany head Sulzer is now looking for a strategy to transfer the Chinese statistics to Germany. Would NIO consider manufacturing at one of the struggling VW plants in Dresden or Osnabrück or at Audi in Brussels in order to avoid import tariffs? “Yes,” says Sulzer, but such considerations have already been dismissed. However, Chinese entrepreneurs are pragmatic. If it benefits the brand, the company might be willing to reconsider. And the crisis at VW could soon cause the prices for contract work at German plants to fall.
New Firefly brand to drive sales
Current forecasts at least prove Sulzer right when it comes to market development: EV sales are expected to pick up in Germany in 2025. The market for battery electric vehicles (BEV) recently recorded a drop of 27.4 percent compared to the previous year, with only around 380,000 newly registered EVs in Germany in 2024. In 2025, on the other hand, the number of BEVs is expected to reach 666,000, announced Manuel Kallweit, Chief Economist of the German Association of the Automotive Industry, at the association’s annual press conference in mid-January. But can NIO also benefit from the expected upturn in the industry?
At least things are looking better in China. Its EV market is breaking records and NIO has almost reached its set target of 230,000 vehicles for 2024. The company sold a total of 221,970 EVs to customers. This puts NIO in 7th place on the leaderboard of young Chinese NEV manufacturers, directly behind Geely subsidiary Zeekr (222,123), which was founded in 2021, and ahead of VW partner Xpeng (190,068). Li Auto (500,508) is ranked first, although it focuses on plug-in hybrids and electric cars with range extenders.
This year, NIO aims to double its sales to 450,000 vehicles. To this end, production capacities are also being expanded. The third plant is currently under construction in Hefei, Anhui, which is also home to NIO’s other two plants. It is scheduled to start operations in the third quarter of 2025. Deutsche Bank analysts consider the sales target to be quite realistic. A success that is urgently needed. NIO reported a loss of around three billion euros in the 2023 fiscal year. The combined figure for the first three quarters of 2024 is around two billion – the annual financial statements are still pending.
Another billion-euro loss in 2024
NIO is currently investing a lot of money to put the brand on a growth trajectory. With Onvo and Firefly, two subsidiary brands are being launched in the mid-range and entry-level segments, which are intended to generate unit sales and economies of scale with more affordable models. In addition to car sales, NIO also generates revenue from other sources: The battery for 80 percent of the vehicles sold is rented, not purchased. This generates a monthly revenue stream.
And the battery swap stations are also set to make money in the future by feeding electricity into the grid via bi-directional charging. In China, this is already a multi-million euro market for NIO – one of the few brands whose vehicles and swap stations have mastered this technology. Due to the rapid industrial development in recent decades, the Chinese power grid has reached its load limit in many parts of the country. Feeding back the energy from the batteries could provide valuable relief. Collaboration: Julia Fiedler
E-Autos
Translation missing.
Events
Feb. 4, 2025; 8:30 a.m. Merics, Breakfast Briefing (European Policy Center, Rue du Trône 14-16, 1000 Brussels): EU-China-US triangle in the Trump era: Reading the first signalsMore
Feb. 7, 2025; 10:30 a.m. CST EUSME Center, (Four Seasons Hotel Beijing 48 Liangmaqiao Road, Chaoyang District, Beijing): Reviving Demand, Regaining Momentum: An Overview of the World Bank’s China Economic UpdateMore
Feb. 7, 2025; 3 p.m. CET (10 p.m. CST) Asia Society New York, Webinar: The Art of Dealing with China in the Age of UncertaintyMore
News
DeepSeek: Growing security concerns
The Chinese AI start-up DeepSeek is increasingly facing accusations of potential data privacy violations. DeepSeek’s privacy policy is said to have significant gaps that include chat histories, IP addresses, as well as uploaded images and files. DeepSeek is currently attracting much attention for competing with Western AI tools at a fraction of the cost.
Italy has now been one of the first EU countries to take action and had the app pulled from the Google and Apple app stores and sent a list of questions to DeepSeek. Among other things, it wants to know “what personal data is collected, from what sources and for what purposes.”
Meanwhile, the French data protection authority CNIL has announced that it will also question the Chinese start-up DeepSeek to get a better picture of how its AI system works and what risks it poses to users’ privacy, a spokesperson for the authority said on Thursday. German authorities will probably also have to deal with DeepSeek soon.
The European General Data Protection Regulation (GDPR) does not provide for data exchange with China, as the data privacy requirements are different and the EU and China have not signed any agreements.
Moreover, the US cyber security firm Wiz reported that it had discovered a data leak at DeepSeek. Over one million data sets, including digital software keys and chat logs, are believed to have been exposed. According to Wiz co-founder Ami Luttwak, DeepSeek responded immediately. They took it down in less than an hour,” Luttwak said. “But this was so simple to find, and we believe we’re not the only ones who found it. niw
Technologie
De-risking: Merz favors America over China
The frontrunner for the conservative CDU/CSU party bloc in the German elections, Friedrich Merz, believes that China is a less promising market for German companies than the American continent. “I have become more convinced in recent weeks and months that the American market, including the South American market, is definitely a more secure basis for us (…) than China alone, for example,” said the CDU leader at an event organized by the German Association of the Automotive Industry. He said China was a country that did not adhere to the rule of law and that companies were taking “great entrepreneurial risks.”
Merz appeared more confident about transatlantic relations. He said US President Trump knows “that he needs many things that he does not have himself.” This would include the EU single market with 450 million people as a sales market, but also the need for technology, especially from Germany.
A few days before, Merz had declared that companies should not rely on government aid in the event of any losses in China, adding that it was out of the question for companies to deliberately seek the risk of investing in China and for the state to have then socialize losses. Given the rule of law deficits in China, even companies that are only in talks with Chinese companies should “expect major disruptions.” lp/rtr
China
EU-Binnenmarkt
Domestic consumption: Holiday week generates record box office revenue
Concerns about Chinese domestic consumption have at least been eased somewhat at the box office. On Lunar New Year’s Day last Wednesday, over 35 million people flocked to cinemas, more than ever before on a single day in China. Ticket sales generated around 1.8 billion yuan (250 million US dollars). On top of this came consumer spending on drinks and snacks, although the volume has not been quantified. The state news agency Xinhua spoke of a milestone.
The new record has not been achieved entirely by chance. Six Chinese films opened in cinemas on Wednesday, which probably attracted additional viewers. The latest releases cover five different genres and thus have something for everyone. The country’s movie market has also recently been slowing down. Last year, cinema revenue fell by almost 23 percent to 42.5 billion RMB (around 5.6 billion euros). In the year before, the figure was still around 55 billion RMB, according to figures from the China Film Administration.
The Chinese government has been making persistent efforts to boost its citizens’ waning consumer sentiment. Among other things, it increased the minimum wage in several provinces and regions and extended the duration of the national holiday around the Spring Festival from seven to eight days. Analysts expect the cinema industry to record total revenues of more than one billion US dollars by the end of the Lunar holidays. This volume would also mean a new record. grz
Konsum
Raw materials: Export railroad line in Burundi and Tanzania
Tanzania and Burundi have signed an agreement with two Chinese companies to build a railroad line between the two countries. Among other things, the line will transport metals such as nickel from Burundi to the port of Dar es Salaam in Tanzania. Nickel is a key resource for battery manufacturing.
The 2.15 billion US dollar joint project is being jointly implemented by the China Railway Engineering Group and the China Railway Engineering Design and Consulting Group. The funding is being provided by the African Development Bank (AfDB), Tanzania’s Finance Minister Mwigulu Nchemba confirmed.
The two countries expect the 282-kilometer standard-gauge railroad to transport three million tons of minerals annually, the Tanzanian Ministry of Finance announced last year. Over the past ten years, China has funded numerous infrastructure projects in Africa as part of the Belt and Road Initiative, including railroad lines, power plants and ports. rtr
If you fall ill in China, you don’t usually go directly to a doctor’s office, but to a public hospital. Hospitals account for around 70 percent of the Chinese pharmaceutical market. While patients in private clinics have to pay more, one of the benefits is greater access to a wider range of drugs, including foreign brands. What has long been criticized as two-class healthcare has now triggered particularly heated discussions. The government has effectively restricted access to foreign pharmaceuticals in the public healthcare system as much as possible.
In 2018, the Communist Party introduced a tendering process to the public healthcare system, under which the suppliers of the cheapest product are awarded the contract. This mainly benefits domestic generic drugs. Meanwhile, many foreign pharmaceutical companies withdrew from China. A total of 493 companies participated in the latest government-led procurement round, offering 778 products. Remarkably, not a single foreign drug was awarded a contract.
Online rebellion
On the social media network Weibo, the hashtag #进口药退出公立医院# (Foreign drugs disappeared from public hospitals) became a trending topic within a few days and generated over 100 million hits. Many internet users doubt that domestic generics are as effective as branded foreign drugs. Doctor Li Xiang from northeast China wrote online: “A family member of mine has to take a certain drug long-term. But in the past few months, it was no longer available. I also tried to contact the sales representative of the pharmaceutical company directly, but the sales department also ran out of stock. I don’t dare buy alternative generics for fear of side effects. My family member’s life is at stake.”
Another user, who calls himself “GP MD,” commented: “Original drugs have disappeared, and imported medical consumables have also been largely abolished. Soon we will return to the time when surgical operations were performed with thick needles and coarse thread. So why did we develop high-speed trains in the first place? Theoretically, you could also travel from Beijing to Shanghai by carriage.”
There is no evidence that Chinese generics are universally less effective than branded drugs or have side effects. However, some official studies raised eyebrows. Xia Zhimin, a doctor at the Hospital for Traditional Chinese Medicine in Hangzhou, pointed out strange similarities in selected comparative studies of brand-name drugs and generics. “The figures are exactly the same down to two decimal points,” Xia wrote in an online post. In a response, China’s drug regulators spoke of “editing errors.” Health expert Hu Shanlian from Fudan University in Shanghai also criticized the fact that the equivalence of different generics is not thoroughly tested. As a result, “the quality of the drugs can vary greatly.”
Generics benefit low-income groups
The price-based bidding process has financial benefits for the central government: The prices of many drugs have halved in recent years. The government has saved around 50 billion US dollars on drug purchases within five years, as the New York Times reported. As patients in the public healthcare system usually have to cover part of the medication costs themselves, the lower prices also benefit poorer population groups.
Against this backdrop, users have also spoken out in recent days, showing understanding for the healthcare reforms. However, they also demand that patients should not be deprived of their freedom of choice. Many are willing to pay for foreign pharmaceuticals out of their own pockets. Even pro-government commentators raised the issue. The former editor-in-chief of the party-affiliated Global Times, Hu Xijin, commented: “Centralized procurement has lowered the cost of medical treatment in public hospitals, which is undoubtedly a good thing. But any measure should be based on reality. Cutting costs is desirable, but not at the expense of effectiveness.”
Private hospitals and e-commerce platforms benefit
Private hospitals’ business also shows that not all patients trust domestic generics. As they are not strictly bound to the central procurement model, they possess sufficient drug inventories. Many private hospitals have begun to adapt their business structure and increase the share of surgical and oncology services.
However, even private hospitals must comply with restrictions regarding the ratio of centrally procured to decentrally procured drugs. In Shanghai, for example, the ratio is 1:1, meaning private hospitals must procure one generic drug for every brand-name drug. In reality, brand drugs are often in short supply, while patients hardly request generics.
E-commerce platforms are also benefiting from the reforms. Drug sales on the JD Health platform have grown strongly in the last three years. After the annual central procurement round, search queries for those drugs that had not been awarded a contract soared. Pharmaceutical companies promptly tried to build a partnership with JD. The platform also recently partnered with private institutions, offering drug finder services. However, drugs purchased via e-commerce platforms are not covered by China’s national health insurance.
A potentially severe loss of trust
Given economic inequalities and the aging population, the Chinese healthcare system is under considerable reform pressure. That means the government has to make difficult decisions. But even if the centralized drug procurement system is seen as a necessary measure, sudden measures such as the exclusion of brand-name foreign drugs add to complaints about the health insurance system. Many people feel that the system is ineffective in everyday life and does not offer enough help when they fall ill – a potentially severe loss of trust.
Executive Moves
Lars Anke has been Executive Director & Chief Representative at the Hamburg Liaison Office China, the official representation of the City of Hamburg in China, since January. Anke previously worked at HHLA Hamburger Hafen und Logistik AG for more than five years. Most recently, he held the position of Chief Representative Asia.
Shunan Cao has been Head of Department Business Digital Organization in China for Bosch Rexroth since January. In this role, Cao is responsible for the digitalization strategy and digital sales channels, among other things. The Bremen-trained sales manager is based in Shanghai.
Is something changing in your organization? Let us know at heads@table.media!
Dessert
The Tsutaya bookshop chain was once considered a symbol of bourgeois sophistication thanks to its unique focus on literature, lifestyle and selected accessories. But those days are probably over. In Shanghai, a once-popular store in the Moho Mall closed its doors for good last week – and it’s not the only one. Money is tight and the Chinese middle class no longer buys enough books. However, some still come to linger – after all, browsing doesn’t cost a thing, and why not take a selfie while you are there?
NIO was regarded as the spearhead of Chinese EV expansion into Europe. Its luxurious showrooms in cities such as Hamburg and Berlin testify to this. And indeed, the glossy exhibitions have no shortage of visitors keen to catch a glimpse of their modern cars. The only problem is that nobody wants to buy them.
In 2024, NIO only sold 398 cars in Germany. Bureaucratic hurdles, a direct distribution that takes some getting used to, and a generally skeptical EV market are to blame, analyzes Christian Domke Seidel. What remains is the realization that Chinese EV brands need a lot of endurance if they want to be successful in Germany.
Meanwhile, a reform of the Chinese healthcare system has sparked heated debate. The government has severely restricted the availability of branded foreign pharmaceuticals in public hospitals. Yet many citizens doubt the effectiveness of domestic generic alternatives and are concerned about whether they will only receive second-class medical care.
But the reform is not all bad, writes the author of our “China Perspective” column. As patients in the public healthcare system generally have to bear part of the medication costs themselves, cheaper prices also benefit lower incomes.
Your Fabian Peltsch
Feature
NIO: Why the Chinese EV brand needs a lot of perseverance in Germany
William Li, CEO of Nio, with the first model of Firefly, the new subsidiary brand in the entry-level segment.
The NIO-House in Hamburg is located in one of the premium shopping streets on Jungfernstieg, between boutiques for luxury brands and jewelers – with the Scandinavian-designed showroom on the first floor flooded, the café with children’s corner and rental offices on the upper floor.
If you listen to the executives talking about the Chinese manufacturers’ prospects in Germany in this exclusive atmosphere, you might get the impression that NIO is just about to take over the EV market. Especially as the fledgling company from Shanghai, which has only been building vehicles since 2016, had no other plans than to grab a big slice of the market when it expanded into Germany in 2022.
But the reality is far from that: In 2024, NIO sold only 398 cars in Germany. This is not only very low, but also 71 percent less than in 2023. The challenges that NIO faces in Germany are emblematic of the differences between the German and Chinese markets. Traditional customer business in car dealerships on the one side, new ideas such as direct sales on the other. NIO has felt how difficult it is for German customers to break with their habits.
Lengthy bureaucratic processes
David Sulzer, the new General Manager of NIO Germany, is aware of the situation: “Of course we are not satisfied. I came here to bring NIO forward.” And not everything has to do with sales. Another issue is lengthy approval processes. Leasing or vehicle approval processes, for example: In Germany, this involves complex damage assessments and residual value estimates and takes time. The German authorities also initially seemed overwhelmed by NIO’s business model – swapping batteries instead of charging them has so far not been part of the German process regulation.
Does the Chinese car manufacturer have the proper strategy and sufficient financial reserves to turn things around? Sulzer draws optimism from some partial successes. The company managed to cut key bureaucratic knots.
The difficult matter of swap station
NIO achieved its first partial success with vehicle registration documents. Nio operates battery swap stations. However, owners of a small 75 kWh battery could not use these stations until now because they would be given a 100 kWh battery. These are heavier and would change the vehicle’s curb weight, meaning that the vehicle registration document would contain incorrect information. But the problem has been solved and NIO has received the necessary approval.
The second problem lies in the swap stations themselves. Germany has no regulations for them. The manufacturer first had to obtain special permits. There are now 19 such battery swap stations in Germany. However, the manufacturer is still a long way from a nationwide network. Rapid progress in fast charging also casts doubt on the viability of this expensive infrastructure. China now has more than 3,000 swap stations. Here, NIO formed a battery swap alliance, which several manufacturers have since joined, including the state-owned company FAW, South China’s largest car manufacturer Guangzhou Automotive, Changan Automobile, Geely Holding, Chery and Lotus.
Weak EV market weighs on NIO
On top of bureaucratic hurdles, there is now an acute sales problem. NIO’s cars certainly generated interest, with 600,000 guests visiting its showrooms in 2024. But only very few bought a car. It is the continuation of a crisis that has already led to personnel changes in the past. In late 2023, Marius Hayler took over the business in Germany after achieving good results in the EV country of Norway. However, he left the brand in the summer. Sulzer is now supposed to bring continuity and sustainable growth.
As the new General Manager explains to Table.Briefings, the current slump needs to be seen in perspective. “We started in 2022 when there was a lot of hype about electric cars. Now we’ve come back down to earth – like all manufacturers. We expect to see a genuine increase in numbers after the consolidation phase in 2025.”
The German Manager Magazin reports that NIO even plans to change its entire sales structure – away from direct sales and towards a dealership network. Despite the popularity of its modernly designed showrooms, many German customers prefer to go to their trusted dealership. According to experts, there is no way around this distribution form in Germany. After the initial launch difficulties with the core brand NIO, the company seems to have recognized this. At the very least, it is currently looking for an importer for its Firefly brand.
Conceivable change to the sales model
The German market is prestigious because foreign brands struggle to conquer it. Skepticism towards Chinese manufacturers still prevails, although young customers tend to be open-minded – if the price is right. If not profits, Sulzer will have to present a clear and positive development. For cost reasons, Lihong Qin, NIO’s number two, already had to postpone expansion into markets such as Belgium, Switzerland and Austria.
Germany head Sulzer is now looking for a strategy to transfer the Chinese statistics to Germany. Would NIO consider manufacturing at one of the struggling VW plants in Dresden or Osnabrück or at Audi in Brussels in order to avoid import tariffs? “Yes,” says Sulzer, but such considerations have already been dismissed. However, Chinese entrepreneurs are pragmatic. If it benefits the brand, the company might be willing to reconsider. And the crisis at VW could soon cause the prices for contract work at German plants to fall.
New Firefly brand to drive sales
Current forecasts at least prove Sulzer right when it comes to market development: EV sales are expected to pick up in Germany in 2025. The market for battery electric vehicles (BEV) recently recorded a drop of 27.4 percent compared to the previous year, with only around 380,000 newly registered EVs in Germany in 2024. In 2025, on the other hand, the number of BEVs is expected to reach 666,000, announced Manuel Kallweit, Chief Economist of the German Association of the Automotive Industry, at the association’s annual press conference in mid-January. But can NIO also benefit from the expected upturn in the industry?
At least things are looking better in China. Its EV market is breaking records and NIO has almost reached its set target of 230,000 vehicles for 2024. The company sold a total of 221,970 EVs to customers. This puts NIO in 7th place on the leaderboard of young Chinese NEV manufacturers, directly behind Geely subsidiary Zeekr (222,123), which was founded in 2021, and ahead of VW partner Xpeng (190,068). Li Auto (500,508) is ranked first, although it focuses on plug-in hybrids and electric cars with range extenders.
This year, NIO aims to double its sales to 450,000 vehicles. To this end, production capacities are also being expanded. The third plant is currently under construction in Hefei, Anhui, which is also home to NIO’s other two plants. It is scheduled to start operations in the third quarter of 2025. Deutsche Bank analysts consider the sales target to be quite realistic. A success that is urgently needed. NIO reported a loss of around three billion euros in the 2023 fiscal year. The combined figure for the first three quarters of 2024 is around two billion – the annual financial statements are still pending.
Another billion-euro loss in 2024
NIO is currently investing a lot of money to put the brand on a growth trajectory. With Onvo and Firefly, two subsidiary brands are being launched in the mid-range and entry-level segments, which are intended to generate unit sales and economies of scale with more affordable models. In addition to car sales, NIO also generates revenue from other sources: The battery for 80 percent of the vehicles sold is rented, not purchased. This generates a monthly revenue stream.
And the battery swap stations are also set to make money in the future by feeding electricity into the grid via bi-directional charging. In China, this is already a multi-million euro market for NIO – one of the few brands whose vehicles and swap stations have mastered this technology. Due to the rapid industrial development in recent decades, the Chinese power grid has reached its load limit in many parts of the country. Feeding back the energy from the batteries could provide valuable relief. Collaboration: Julia Fiedler
E-Autos
Translation missing.
Events
Feb. 4, 2025; 8:30 a.m. Merics, Breakfast Briefing (European Policy Center, Rue du Trône 14-16, 1000 Brussels): EU-China-US triangle in the Trump era: Reading the first signalsMore
Feb. 7, 2025; 10:30 a.m. CST EUSME Center, (Four Seasons Hotel Beijing 48 Liangmaqiao Road, Chaoyang District, Beijing): Reviving Demand, Regaining Momentum: An Overview of the World Bank’s China Economic UpdateMore
Feb. 7, 2025; 3 p.m. CET (10 p.m. CST) Asia Society New York, Webinar: The Art of Dealing with China in the Age of UncertaintyMore
News
DeepSeek: Growing security concerns
The Chinese AI start-up DeepSeek is increasingly facing accusations of potential data privacy violations. DeepSeek’s privacy policy is said to have significant gaps that include chat histories, IP addresses, as well as uploaded images and files. DeepSeek is currently attracting much attention for competing with Western AI tools at a fraction of the cost.
Italy has now been one of the first EU countries to take action and had the app pulled from the Google and Apple app stores and sent a list of questions to DeepSeek. Among other things, it wants to know “what personal data is collected, from what sources and for what purposes.”
Meanwhile, the French data protection authority CNIL has announced that it will also question the Chinese start-up DeepSeek to get a better picture of how its AI system works and what risks it poses to users’ privacy, a spokesperson for the authority said on Thursday. German authorities will probably also have to deal with DeepSeek soon.
The European General Data Protection Regulation (GDPR) does not provide for data exchange with China, as the data privacy requirements are different and the EU and China have not signed any agreements.
Moreover, the US cyber security firm Wiz reported that it had discovered a data leak at DeepSeek. Over one million data sets, including digital software keys and chat logs, are believed to have been exposed. According to Wiz co-founder Ami Luttwak, DeepSeek responded immediately. They took it down in less than an hour,” Luttwak said. “But this was so simple to find, and we believe we’re not the only ones who found it. niw
Technologie
De-risking: Merz favors America over China
The frontrunner for the conservative CDU/CSU party bloc in the German elections, Friedrich Merz, believes that China is a less promising market for German companies than the American continent. “I have become more convinced in recent weeks and months that the American market, including the South American market, is definitely a more secure basis for us (…) than China alone, for example,” said the CDU leader at an event organized by the German Association of the Automotive Industry. He said China was a country that did not adhere to the rule of law and that companies were taking “great entrepreneurial risks.”
Merz appeared more confident about transatlantic relations. He said US President Trump knows “that he needs many things that he does not have himself.” This would include the EU single market with 450 million people as a sales market, but also the need for technology, especially from Germany.
A few days before, Merz had declared that companies should not rely on government aid in the event of any losses in China, adding that it was out of the question for companies to deliberately seek the risk of investing in China and for the state to have then socialize losses. Given the rule of law deficits in China, even companies that are only in talks with Chinese companies should “expect major disruptions.” lp/rtr
China
EU-Binnenmarkt
Domestic consumption: Holiday week generates record box office revenue
Concerns about Chinese domestic consumption have at least been eased somewhat at the box office. On Lunar New Year’s Day last Wednesday, over 35 million people flocked to cinemas, more than ever before on a single day in China. Ticket sales generated around 1.8 billion yuan (250 million US dollars). On top of this came consumer spending on drinks and snacks, although the volume has not been quantified. The state news agency Xinhua spoke of a milestone.
The new record has not been achieved entirely by chance. Six Chinese films opened in cinemas on Wednesday, which probably attracted additional viewers. The latest releases cover five different genres and thus have something for everyone. The country’s movie market has also recently been slowing down. Last year, cinema revenue fell by almost 23 percent to 42.5 billion RMB (around 5.6 billion euros). In the year before, the figure was still around 55 billion RMB, according to figures from the China Film Administration.
The Chinese government has been making persistent efforts to boost its citizens’ waning consumer sentiment. Among other things, it increased the minimum wage in several provinces and regions and extended the duration of the national holiday around the Spring Festival from seven to eight days. Analysts expect the cinema industry to record total revenues of more than one billion US dollars by the end of the Lunar holidays. This volume would also mean a new record. grz
Konsum
Raw materials: Export railroad line in Burundi and Tanzania
Tanzania and Burundi have signed an agreement with two Chinese companies to build a railroad line between the two countries. Among other things, the line will transport metals such as nickel from Burundi to the port of Dar es Salaam in Tanzania. Nickel is a key resource for battery manufacturing.
The 2.15 billion US dollar joint project is being jointly implemented by the China Railway Engineering Group and the China Railway Engineering Design and Consulting Group. The funding is being provided by the African Development Bank (AfDB), Tanzania’s Finance Minister Mwigulu Nchemba confirmed.
The two countries expect the 282-kilometer standard-gauge railroad to transport three million tons of minerals annually, the Tanzanian Ministry of Finance announced last year. Over the past ten years, China has funded numerous infrastructure projects in Africa as part of the Belt and Road Initiative, including railroad lines, power plants and ports. rtr
If you fall ill in China, you don’t usually go directly to a doctor’s office, but to a public hospital. Hospitals account for around 70 percent of the Chinese pharmaceutical market. While patients in private clinics have to pay more, one of the benefits is greater access to a wider range of drugs, including foreign brands. What has long been criticized as two-class healthcare has now triggered particularly heated discussions. The government has effectively restricted access to foreign pharmaceuticals in the public healthcare system as much as possible.
In 2018, the Communist Party introduced a tendering process to the public healthcare system, under which the suppliers of the cheapest product are awarded the contract. This mainly benefits domestic generic drugs. Meanwhile, many foreign pharmaceutical companies withdrew from China. A total of 493 companies participated in the latest government-led procurement round, offering 778 products. Remarkably, not a single foreign drug was awarded a contract.
Online rebellion
On the social media network Weibo, the hashtag #进口药退出公立医院# (Foreign drugs disappeared from public hospitals) became a trending topic within a few days and generated over 100 million hits. Many internet users doubt that domestic generics are as effective as branded foreign drugs. Doctor Li Xiang from northeast China wrote online: “A family member of mine has to take a certain drug long-term. But in the past few months, it was no longer available. I also tried to contact the sales representative of the pharmaceutical company directly, but the sales department also ran out of stock. I don’t dare buy alternative generics for fear of side effects. My family member’s life is at stake.”
Another user, who calls himself “GP MD,” commented: “Original drugs have disappeared, and imported medical consumables have also been largely abolished. Soon we will return to the time when surgical operations were performed with thick needles and coarse thread. So why did we develop high-speed trains in the first place? Theoretically, you could also travel from Beijing to Shanghai by carriage.”
There is no evidence that Chinese generics are universally less effective than branded drugs or have side effects. However, some official studies raised eyebrows. Xia Zhimin, a doctor at the Hospital for Traditional Chinese Medicine in Hangzhou, pointed out strange similarities in selected comparative studies of brand-name drugs and generics. “The figures are exactly the same down to two decimal points,” Xia wrote in an online post. In a response, China’s drug regulators spoke of “editing errors.” Health expert Hu Shanlian from Fudan University in Shanghai also criticized the fact that the equivalence of different generics is not thoroughly tested. As a result, “the quality of the drugs can vary greatly.”
Generics benefit low-income groups
The price-based bidding process has financial benefits for the central government: The prices of many drugs have halved in recent years. The government has saved around 50 billion US dollars on drug purchases within five years, as the New York Times reported. As patients in the public healthcare system usually have to cover part of the medication costs themselves, the lower prices also benefit poorer population groups.
Against this backdrop, users have also spoken out in recent days, showing understanding for the healthcare reforms. However, they also demand that patients should not be deprived of their freedom of choice. Many are willing to pay for foreign pharmaceuticals out of their own pockets. Even pro-government commentators raised the issue. The former editor-in-chief of the party-affiliated Global Times, Hu Xijin, commented: “Centralized procurement has lowered the cost of medical treatment in public hospitals, which is undoubtedly a good thing. But any measure should be based on reality. Cutting costs is desirable, but not at the expense of effectiveness.”
Private hospitals and e-commerce platforms benefit
Private hospitals’ business also shows that not all patients trust domestic generics. As they are not strictly bound to the central procurement model, they possess sufficient drug inventories. Many private hospitals have begun to adapt their business structure and increase the share of surgical and oncology services.
However, even private hospitals must comply with restrictions regarding the ratio of centrally procured to decentrally procured drugs. In Shanghai, for example, the ratio is 1:1, meaning private hospitals must procure one generic drug for every brand-name drug. In reality, brand drugs are often in short supply, while patients hardly request generics.
E-commerce platforms are also benefiting from the reforms. Drug sales on the JD Health platform have grown strongly in the last three years. After the annual central procurement round, search queries for those drugs that had not been awarded a contract soared. Pharmaceutical companies promptly tried to build a partnership with JD. The platform also recently partnered with private institutions, offering drug finder services. However, drugs purchased via e-commerce platforms are not covered by China’s national health insurance.
A potentially severe loss of trust
Given economic inequalities and the aging population, the Chinese healthcare system is under considerable reform pressure. That means the government has to make difficult decisions. But even if the centralized drug procurement system is seen as a necessary measure, sudden measures such as the exclusion of brand-name foreign drugs add to complaints about the health insurance system. Many people feel that the system is ineffective in everyday life and does not offer enough help when they fall ill – a potentially severe loss of trust.
Executive Moves
Lars Anke has been Executive Director & Chief Representative at the Hamburg Liaison Office China, the official representation of the City of Hamburg in China, since January. Anke previously worked at HHLA Hamburger Hafen und Logistik AG for more than five years. Most recently, he held the position of Chief Representative Asia.
Shunan Cao has been Head of Department Business Digital Organization in China for Bosch Rexroth since January. In this role, Cao is responsible for the digitalization strategy and digital sales channels, among other things. The Bremen-trained sales manager is based in Shanghai.
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Dessert
The Tsutaya bookshop chain was once considered a symbol of bourgeois sophistication thanks to its unique focus on literature, lifestyle and selected accessories. But those days are probably over. In Shanghai, a once-popular store in the Moho Mall closed its doors for good last week – and it’s not the only one. Money is tight and the Chinese middle class no longer buys enough books. However, some still come to linger – after all, browsing doesn’t cost a thing, and why not take a selfie while you are there?
