Oliver Blume will become the new CEO of the Volkswagen Group in September. From China.Table’s perspective, this is an exciting decision. Blume graduated from the renowned Tongji University in Shanghai in 2001. This brings a true China expert to the top of a DAX company. Since several mistakes were made by his predecessor on the Chinese market, we believe that this appointment is worth analyzing. Especially in the procurement of batteries, Blume had a luckier hand as Porsche boss than Herbert Diess at VW, writes Felix Lee.
Not only the Germans love Aldi. Chinese customers do, too. But for different reasons. While Germans favor Aldi for their cheap prices, the supermarket chain is considered real classy in the Far East. Fine European wines are offered on wooden shelves. The concept is also doing surprisingly well in the challenging Chinese retail market and is a reason for the group to quickly open more stores in the future. But the venture remains risky for the time being, warns our Beijing team. New lockdowns could cut off customers’ access to the stores at any time.
Right in the middle of the factory-wide vacation in Wolfsburg, the news about the change of leadership at Volkswagen dropped on late Friday afternoon. For the previous VW CEO Herbert Diess, at least according to VW circles, it came as a shock. He was well aware that some employees were upset with him and that he still had not solved some crucial problems. But the decision to remove him from his position came without warning.
With Oliver Blume as his successor, the Supervisory Board is now counting on someone with direct China expertise. This is no coincidence. Almost all of the Group’s problems and construction sites are currently directly or indirectly related to the large market in the Far East:
According to company information, Blume earned his Ph.D. in 2001 at the College of Automotive Engineering at the renowned Tongji University in Shanghai. Tongji is not just any university. It is one of the top institutions in the People’s Republic. It scores well above German universities in international rankings. Founded in 1907 as a German university for Chinese in Shanghai, it is one of the oldest of China’s modern educational institutions. The name Tongji inspires awe.
Immediately after his time at Tongji in Shanghai, Blume acquired corporate experience at several locations. He first went to Audi, then to Seat, and finally to the core Volkswagen brand in Wolfsburg, where he was in charge of production planning. In 2015, he became the CEO of Porsche. Three years later, he was also appointed to the VW Group Board of Management, overseeing production. Blume also plans to remain Porsche’s CEO in the future.
According to the Group, Blume was directly involved in the China strategy presented by designated China Board member Ralf Brandstaetter in June. As of August, a separate China Board is to be installed, which will operate independently on the ground across all brands. So VW will continue to pursue this strategy under Blume as the new CEO.
But will this strategy be enough to maintain the German automaker’s market share of last year’s 40 percent? Given the rapid pace at which the Chinese car market currently develops, Blume may also not have much time to prove his worth.
The environment in China is changing at such a rapid pace that German management is struggling to keep up. Diess had to learn that as well. Without the pressure from China, VW would not have made the shift to electric models. Nevertheless, the German market leader is still lagging behind. So Diess has left Blume a lot on his plate:
The subsidiary Cariad founded by Diesss was tasked with developing a uniform operating system for the entire Volkswagen Group. It was supposed to lay the foundation for autonomous driving. Recently, however, it became apparent that there were considerable delays due to various coordination problems and a lack of specialists, leaving the Volkswagen Group no choice but to use two different systems for years to come, with hardly any overlap between them. This means the Group will lose valuable time.
For Chinese customers, a car’s digital functions tend to be more important than traditional features such as engine performance. Easy-to-use software is a decisive factor in their purchasing decision. However, the Chinese competition is clearly ahead of the German carmakers in this respect: BYD is already leading the EV market in China, while Chinese newcomers such as NIO and Xpeng are catching up quickly and winning customers with their powerful user interfaces.
In particular, the connectivity to popular apps is far more in line with the needs of the Chinese clientele than Volkswagen’s technology. Meanwhile, BYD is also expanding into Europe. So Diess’ departure is probably not least connected with the problems in the Chinese business.
But Diess also showed a lack of finesse when it came to dealing with political issues during his time as CEO. Just in early July, he said in an interview that the Group obtains information about the human rights situation in China from its joint venture partner. However, the partner is a state-owned enterprise and not an independent observer (China.Table reported). In a 2019 interview with the British BBC, Diess feigned ignorance when he was questioned about the brutal internment camps in China’s province of Xinjiang. VW is the only foreign automaker that also operates a car plant in Xinjiang. Diess’ statement had caused great outrage, especially in English-speaking media. In the meantime, the German Ministry of Economics also denied trade subsidies to the Volkswagen Group due to its activities in Xinjiang (China.Table reported).
Aldi’s supermarkets in China look very different from their German counterparts. Anyone who has visited one of the supermarkets in Shanghai will immediately understand that the German company does not want to be perceived as a mere discount supermarket in the People’s Republic. The stores, like the one in Shanghai’s Jingan district, have a distinctly high-class feel to them. The floors are sparkling clean, and the products are arranged on elegant wooden shelves. Next to the entrance is a café belonging to the store and invites visitors to take a break after shopping. Aldi’s product range is a combination of Chinese, German and international goods.
Apparently, the concept is catching on. After Aldi opened its first two stores in Shanghai in 2019, around 20 more stores opened in the city to date. After the first steps, the big offensive is now apparently about to begin.
There are plans to open hundreds of new stores at once, as reported by German newspaper Handelsblatt, citing Aldi China CEO Roman Rasinger. “China is and remains one of the most interesting markets in all areas, and the rapidly increasing size of the middle class is leading to huge potential in the foods market,” Rasinger said. In Shanghai alone, there would be potential for a triple-digit number of stores.
The city, with its 25 million inhabitants and the Yangtze Delta with a population of more than 100 million, is “currently a priority” for Aldi, Rasinger explained. The group currently evaluates which city it will set its eyes on next. Aldi has great potential to fill “white spots on the supply map,” Rasinger believes.
Aldi does not reveal any sales figures for China. However, market research company WGSN estimates that the discounter will already achieve sales of $80 million with its Chinese stores this year. If the group simply maintained last year’s growth rate of 16 new stores, it would already have sales of around $230 million in 2025 – revenue from e-commerce excluded.
The fact that Aldi has so far only slowly ventured into the Chinese market repeatedly prompted criticism from observers. “If Aldi really takes the Chinese market seriously, they need to open a lot more stores. Not just in Shanghai, but throughout the country,” warned e-commerce analyst Li Chengdong last summer.
However, there were also perfectly sound arguments for first taking a cautious approach. After all, the Chinese market is considered extremely difficult for foreign retailers. Lidl withdrew from the People’s Republic in April 2019 after just over two years. Just like Aldi, Lidl initially experimented with online-only sales. The Spanish discounter Dia sold its 450 stores to the Chinese Suning Group in 2018 after 15 years in China as losses became too great. British retailer Tesco also failed in China in 2014.
In hindsight, it would seem that Aldi made the right decision by not expanding too quickly, especially during the Covid pandemic. This saved the company from having to put an even larger number of stores through the two-month Shanghai lockdown this spring. But the fact that Shanghai was virtually frozen for two months should also serve as a warning to Aldi.
China continues to show no signs of abandoning its strict zero-Covid policy. This means that metropolitan areas could be hit by lockdowns at any moment. In such cases, Aldi would be better positioned if it were to expand into other major hubs in the country rather than focusing on just one region.
In Beijing, on the entire east coast and in the booming south of the country, the Germans would probably have good chances. The local middle class there ticks no differently than in Shanghai. Joern Petring/Gregor Koppenburg
Volkswagen China has presented a flight-ready prototype of its V.MO air cab. The company calls it a product for future “urban air mobility,” which is intended to help solve China’s traffic problems. The device takes off and lands vertically like a helicopter. It is powered by batteries. There is space for four passengers. The company plans to develop the V.MO into an actual product ready for production, emphasizes VW China CEO Stephan Woellenstein.
The official nickname of the passenger drone will be “Flying Tiger,” according to the press release, which is presumably not meant to be a reference to the World War II flying squadron of the same name. Woellenstein called it a good example of a development “in China, for China”. The aircraft was conceptualized locally by young Chinese engineers. However, it will not be a mass product in the foreseeable future. The Flying Tiger will initially be available to wealthy customers only, the company stated. fin
Both solar cell manufacturers Longi and Tongwei have raised their prices. Tongwei raised the price of solar cells of various sizes by between 3 and 4 percent on Monday. Rival Longi followed suit on Tuesday, raising prices for wafers – a precursor to cells – by 3 to 4 percent as well. The price adjustment follows an increase in the cost of polysilicon of just over 15 percent over the past two months. Polysilicon is the base material for wafers.
According to analysts, prices for polysilicon will continue to rise in the third quarter. However, new production facilities will be launched in the fourth quarter, allowing supply to once again keep up with high demand (China.Table reported). China dominates the solar supply chain. The country has a global market share of 75 to more than 80 percent in the production of polysilicon, wafers, solar cells and solar modules (China.Table reported). Price changes in China thus affect the global supply chain. nib
Chang Weiping 常玮平 has stood up against discrimination of people with HIV and sexual minorities. State power responded by preventing him from practicing, torturing him – and holding a mock trial behind closed doors. In his last video shortly before his arrest, Chang already seemed to sense his fate. “If I lose my freedom again, first of all, I want to make it clear that I will not commit suicide, nor will I do any physical harm to myself,” the Chinese man says in a mundane voice into his smartphone camera. Less than a week later, on October 22, 2020, Chang was taken away by the security police.
On Tuesday, the mock trial of the former attorney from the northwestern city of Baoji, who has made it his life’s work to defend the disadvantaged within Chinese society, will begin. Chang has primarily looked out for those discriminated against over their sexual orientation or health condition. This included supporters of the LGBT community or those infected with HIV.
He is now charged with “subversion of state power” 颠覆国家政权. Details are unknown as the trial is being held behind closed doors: Without independent legal counsel or media observers. A verdict is considered a mere formality because 99 percent of all trials in China end with a guilty verdict.
“It is a sad day for human rights in China,” the German Embassy in Beijing wrote on its Weibo account, “Chang Weiping’s bravery and achievements should be celebrated, not punished. We stand by his wife, family, friends and colleagues in calling on Chinese authorities to set him free.” Even though the post was not deleted by the censors at least, and was even given a “like” by about three hundred “silent” supporters, nationalist Internet users are ranting in the comments section with unfriendly messages. For example, Germans are being slandered as “old neo-Nazis” and the LGBT community is called a “cult”.
The fate of Chang Weiping was already foreseeable for years: Due to his commitment to civil society, he would inevitably become the target of the authorities in an increasingly authoritarian China under Xi Jinping. Back in October 2018, the local judicial bureau revoked his legal license for the first time. Due to the political pressure, Chang Weiping was also not able to join other law firms; he was virtually forced into unemployment.
Nearly three years ago, Chang finally met with other activists in Xiamen, in southern China, to debate the eroding state of civil society in the country. Like other participants, he was then detained by security police for ten days in a so-called “black jail”. These are usually inconspicuous private residences used by the authorities as interrogation rooms.
The authorities would probably have left it at that. But Chang Weiping uploaded an eight-and-a-half-minute video to YouTube on October 16 in which he not only proclaimed his innocence, but also recounted the torture he experienced during his illegal detention. “My right index finger and ring finger are still numb and without feeling,” the former human rights lawyer says into his smartphone camera, “They checked everything, but found no evidence.”
Many former inmates of the “black prisons” report sleep deprivation, exhausting interrogations and physical violence. The practice of the so-called “tiger chair” is described as particularly unpleasant: Here, the victim is tied by all limbs to a steel chair and cannot move for hours. However, it is considered a “red line” never to report on such sinister practices. Chang Weiping eventually had to pay for his video with his freedom – the authorities arrested him a few days later.
Chang’s wife left for the courthouse with their son a day before the trial began, but was detained on the highway by police officers with more than a dozen police vehicles. “All I want to do is watch my husband’s trial and find out why he is being charged with subverting state power. What’s the problem?” she wrote desperately on Twitter.
Chang Weiping himself said shortly before his arrest that he did not live up to the designation of “human rights lawyer” in his own view: “Everything I did was just small steps. But I am very proud to say that I contributed to improving society and fulfilled my obligation as a citizen to my countrymen and society.” Fabian Kretschmer
China and Hong Kong met yesterday in the East Asian Men’s Football Championship. China won the match 1-0, Hong Kong had moved up for North Korea in the final round, which is contested by four teams. Japan won the tournament after defeating South Korea 3-0.
Oliver Blume will become the new CEO of the Volkswagen Group in September. From China.Table’s perspective, this is an exciting decision. Blume graduated from the renowned Tongji University in Shanghai in 2001. This brings a true China expert to the top of a DAX company. Since several mistakes were made by his predecessor on the Chinese market, we believe that this appointment is worth analyzing. Especially in the procurement of batteries, Blume had a luckier hand as Porsche boss than Herbert Diess at VW, writes Felix Lee.
Not only the Germans love Aldi. Chinese customers do, too. But for different reasons. While Germans favor Aldi for their cheap prices, the supermarket chain is considered real classy in the Far East. Fine European wines are offered on wooden shelves. The concept is also doing surprisingly well in the challenging Chinese retail market and is a reason for the group to quickly open more stores in the future. But the venture remains risky for the time being, warns our Beijing team. New lockdowns could cut off customers’ access to the stores at any time.
Right in the middle of the factory-wide vacation in Wolfsburg, the news about the change of leadership at Volkswagen dropped on late Friday afternoon. For the previous VW CEO Herbert Diess, at least according to VW circles, it came as a shock. He was well aware that some employees were upset with him and that he still had not solved some crucial problems. But the decision to remove him from his position came without warning.
With Oliver Blume as his successor, the Supervisory Board is now counting on someone with direct China expertise. This is no coincidence. Almost all of the Group’s problems and construction sites are currently directly or indirectly related to the large market in the Far East:
According to company information, Blume earned his Ph.D. in 2001 at the College of Automotive Engineering at the renowned Tongji University in Shanghai. Tongji is not just any university. It is one of the top institutions in the People’s Republic. It scores well above German universities in international rankings. Founded in 1907 as a German university for Chinese in Shanghai, it is one of the oldest of China’s modern educational institutions. The name Tongji inspires awe.
Immediately after his time at Tongji in Shanghai, Blume acquired corporate experience at several locations. He first went to Audi, then to Seat, and finally to the core Volkswagen brand in Wolfsburg, where he was in charge of production planning. In 2015, he became the CEO of Porsche. Three years later, he was also appointed to the VW Group Board of Management, overseeing production. Blume also plans to remain Porsche’s CEO in the future.
According to the Group, Blume was directly involved in the China strategy presented by designated China Board member Ralf Brandstaetter in June. As of August, a separate China Board is to be installed, which will operate independently on the ground across all brands. So VW will continue to pursue this strategy under Blume as the new CEO.
But will this strategy be enough to maintain the German automaker’s market share of last year’s 40 percent? Given the rapid pace at which the Chinese car market currently develops, Blume may also not have much time to prove his worth.
The environment in China is changing at such a rapid pace that German management is struggling to keep up. Diess had to learn that as well. Without the pressure from China, VW would not have made the shift to electric models. Nevertheless, the German market leader is still lagging behind. So Diess has left Blume a lot on his plate:
The subsidiary Cariad founded by Diesss was tasked with developing a uniform operating system for the entire Volkswagen Group. It was supposed to lay the foundation for autonomous driving. Recently, however, it became apparent that there were considerable delays due to various coordination problems and a lack of specialists, leaving the Volkswagen Group no choice but to use two different systems for years to come, with hardly any overlap between them. This means the Group will lose valuable time.
For Chinese customers, a car’s digital functions tend to be more important than traditional features such as engine performance. Easy-to-use software is a decisive factor in their purchasing decision. However, the Chinese competition is clearly ahead of the German carmakers in this respect: BYD is already leading the EV market in China, while Chinese newcomers such as NIO and Xpeng are catching up quickly and winning customers with their powerful user interfaces.
In particular, the connectivity to popular apps is far more in line with the needs of the Chinese clientele than Volkswagen’s technology. Meanwhile, BYD is also expanding into Europe. So Diess’ departure is probably not least connected with the problems in the Chinese business.
But Diess also showed a lack of finesse when it came to dealing with political issues during his time as CEO. Just in early July, he said in an interview that the Group obtains information about the human rights situation in China from its joint venture partner. However, the partner is a state-owned enterprise and not an independent observer (China.Table reported). In a 2019 interview with the British BBC, Diess feigned ignorance when he was questioned about the brutal internment camps in China’s province of Xinjiang. VW is the only foreign automaker that also operates a car plant in Xinjiang. Diess’ statement had caused great outrage, especially in English-speaking media. In the meantime, the German Ministry of Economics also denied trade subsidies to the Volkswagen Group due to its activities in Xinjiang (China.Table reported).
Aldi’s supermarkets in China look very different from their German counterparts. Anyone who has visited one of the supermarkets in Shanghai will immediately understand that the German company does not want to be perceived as a mere discount supermarket in the People’s Republic. The stores, like the one in Shanghai’s Jingan district, have a distinctly high-class feel to them. The floors are sparkling clean, and the products are arranged on elegant wooden shelves. Next to the entrance is a café belonging to the store and invites visitors to take a break after shopping. Aldi’s product range is a combination of Chinese, German and international goods.
Apparently, the concept is catching on. After Aldi opened its first two stores in Shanghai in 2019, around 20 more stores opened in the city to date. After the first steps, the big offensive is now apparently about to begin.
There are plans to open hundreds of new stores at once, as reported by German newspaper Handelsblatt, citing Aldi China CEO Roman Rasinger. “China is and remains one of the most interesting markets in all areas, and the rapidly increasing size of the middle class is leading to huge potential in the foods market,” Rasinger said. In Shanghai alone, there would be potential for a triple-digit number of stores.
The city, with its 25 million inhabitants and the Yangtze Delta with a population of more than 100 million, is “currently a priority” for Aldi, Rasinger explained. The group currently evaluates which city it will set its eyes on next. Aldi has great potential to fill “white spots on the supply map,” Rasinger believes.
Aldi does not reveal any sales figures for China. However, market research company WGSN estimates that the discounter will already achieve sales of $80 million with its Chinese stores this year. If the group simply maintained last year’s growth rate of 16 new stores, it would already have sales of around $230 million in 2025 – revenue from e-commerce excluded.
The fact that Aldi has so far only slowly ventured into the Chinese market repeatedly prompted criticism from observers. “If Aldi really takes the Chinese market seriously, they need to open a lot more stores. Not just in Shanghai, but throughout the country,” warned e-commerce analyst Li Chengdong last summer.
However, there were also perfectly sound arguments for first taking a cautious approach. After all, the Chinese market is considered extremely difficult for foreign retailers. Lidl withdrew from the People’s Republic in April 2019 after just over two years. Just like Aldi, Lidl initially experimented with online-only sales. The Spanish discounter Dia sold its 450 stores to the Chinese Suning Group in 2018 after 15 years in China as losses became too great. British retailer Tesco also failed in China in 2014.
In hindsight, it would seem that Aldi made the right decision by not expanding too quickly, especially during the Covid pandemic. This saved the company from having to put an even larger number of stores through the two-month Shanghai lockdown this spring. But the fact that Shanghai was virtually frozen for two months should also serve as a warning to Aldi.
China continues to show no signs of abandoning its strict zero-Covid policy. This means that metropolitan areas could be hit by lockdowns at any moment. In such cases, Aldi would be better positioned if it were to expand into other major hubs in the country rather than focusing on just one region.
In Beijing, on the entire east coast and in the booming south of the country, the Germans would probably have good chances. The local middle class there ticks no differently than in Shanghai. Joern Petring/Gregor Koppenburg
Volkswagen China has presented a flight-ready prototype of its V.MO air cab. The company calls it a product for future “urban air mobility,” which is intended to help solve China’s traffic problems. The device takes off and lands vertically like a helicopter. It is powered by batteries. There is space for four passengers. The company plans to develop the V.MO into an actual product ready for production, emphasizes VW China CEO Stephan Woellenstein.
The official nickname of the passenger drone will be “Flying Tiger,” according to the press release, which is presumably not meant to be a reference to the World War II flying squadron of the same name. Woellenstein called it a good example of a development “in China, for China”. The aircraft was conceptualized locally by young Chinese engineers. However, it will not be a mass product in the foreseeable future. The Flying Tiger will initially be available to wealthy customers only, the company stated. fin
Both solar cell manufacturers Longi and Tongwei have raised their prices. Tongwei raised the price of solar cells of various sizes by between 3 and 4 percent on Monday. Rival Longi followed suit on Tuesday, raising prices for wafers – a precursor to cells – by 3 to 4 percent as well. The price adjustment follows an increase in the cost of polysilicon of just over 15 percent over the past two months. Polysilicon is the base material for wafers.
According to analysts, prices for polysilicon will continue to rise in the third quarter. However, new production facilities will be launched in the fourth quarter, allowing supply to once again keep up with high demand (China.Table reported). China dominates the solar supply chain. The country has a global market share of 75 to more than 80 percent in the production of polysilicon, wafers, solar cells and solar modules (China.Table reported). Price changes in China thus affect the global supply chain. nib
Chang Weiping 常玮平 has stood up against discrimination of people with HIV and sexual minorities. State power responded by preventing him from practicing, torturing him – and holding a mock trial behind closed doors. In his last video shortly before his arrest, Chang already seemed to sense his fate. “If I lose my freedom again, first of all, I want to make it clear that I will not commit suicide, nor will I do any physical harm to myself,” the Chinese man says in a mundane voice into his smartphone camera. Less than a week later, on October 22, 2020, Chang was taken away by the security police.
On Tuesday, the mock trial of the former attorney from the northwestern city of Baoji, who has made it his life’s work to defend the disadvantaged within Chinese society, will begin. Chang has primarily looked out for those discriminated against over their sexual orientation or health condition. This included supporters of the LGBT community or those infected with HIV.
He is now charged with “subversion of state power” 颠覆国家政权. Details are unknown as the trial is being held behind closed doors: Without independent legal counsel or media observers. A verdict is considered a mere formality because 99 percent of all trials in China end with a guilty verdict.
“It is a sad day for human rights in China,” the German Embassy in Beijing wrote on its Weibo account, “Chang Weiping’s bravery and achievements should be celebrated, not punished. We stand by his wife, family, friends and colleagues in calling on Chinese authorities to set him free.” Even though the post was not deleted by the censors at least, and was even given a “like” by about three hundred “silent” supporters, nationalist Internet users are ranting in the comments section with unfriendly messages. For example, Germans are being slandered as “old neo-Nazis” and the LGBT community is called a “cult”.
The fate of Chang Weiping was already foreseeable for years: Due to his commitment to civil society, he would inevitably become the target of the authorities in an increasingly authoritarian China under Xi Jinping. Back in October 2018, the local judicial bureau revoked his legal license for the first time. Due to the political pressure, Chang Weiping was also not able to join other law firms; he was virtually forced into unemployment.
Nearly three years ago, Chang finally met with other activists in Xiamen, in southern China, to debate the eroding state of civil society in the country. Like other participants, he was then detained by security police for ten days in a so-called “black jail”. These are usually inconspicuous private residences used by the authorities as interrogation rooms.
The authorities would probably have left it at that. But Chang Weiping uploaded an eight-and-a-half-minute video to YouTube on October 16 in which he not only proclaimed his innocence, but also recounted the torture he experienced during his illegal detention. “My right index finger and ring finger are still numb and without feeling,” the former human rights lawyer says into his smartphone camera, “They checked everything, but found no evidence.”
Many former inmates of the “black prisons” report sleep deprivation, exhausting interrogations and physical violence. The practice of the so-called “tiger chair” is described as particularly unpleasant: Here, the victim is tied by all limbs to a steel chair and cannot move for hours. However, it is considered a “red line” never to report on such sinister practices. Chang Weiping eventually had to pay for his video with his freedom – the authorities arrested him a few days later.
Chang’s wife left for the courthouse with their son a day before the trial began, but was detained on the highway by police officers with more than a dozen police vehicles. “All I want to do is watch my husband’s trial and find out why he is being charged with subverting state power. What’s the problem?” she wrote desperately on Twitter.
Chang Weiping himself said shortly before his arrest that he did not live up to the designation of “human rights lawyer” in his own view: “Everything I did was just small steps. But I am very proud to say that I contributed to improving society and fulfilled my obligation as a citizen to my countrymen and society.” Fabian Kretschmer
China and Hong Kong met yesterday in the East Asian Men’s Football Championship. China won the match 1-0, Hong Kong had moved up for North Korea in the final round, which is contested by four teams. Japan won the tournament after defeating South Korea 3-0.
