China’s car manufacturers have come to Brazil with big promises. Brazilian customers are open and curious about the new e-car options. However, it remains to be seen whether the Chinese brands will be able to establish themselves in the long term.
By Christian Domke Seidel
Volkswagen Group China is one of the largest automotive groups in China. However, the company is also facing problems: Whether corona and production stops at VW, chip shortages or criticism of VW in Xinjiang: All Volkswagen China news from the Table.Briefings editorial team! VW Joint Venture & Plants: What is Volkswagen doing in China? Volkswagen Group China is the largest and most successful international car manufacturer in China. The company produces and sells a wide range of vehicles in China. In order to be able to produce in China, Volkswagen entered into a joint venture with the Chinese company SAIC Motor in Shanghai as early as 1984. A joint venture with FAW in Changchun was added in 1991. The Volkswagen Anhui joint venture with JAC Motors has also existed since 2017. In addition to China as a production location, Volkswagen also hopes that the joint ventures in China will enable it to better assess the local market. There are around 40 VW plants in China at the following locations: Volkswagen has a market share of around 16% in China. However, this has shrunk in recent years. One factor is the growing competition from both domestic and foreign manufacturers such as BYD or Tesla in the field of electromobility. VW and corona: What impact has corona had on Volkswagen in China? Corona is another factor affecting production and sales at Volkswagen in China. VW's sales in China shrank significantly in 2021. On the one hand, demand for cars fell sharply, especially at the beginning of the coronavirus pandemic. Corona also restricted VW production. The reason for this is the zero Covid policy, which will continue until the end of 2022 and has repeatedly led to lockdowns. For example, the lockdown in Shanghai in spring 2022 and the lockdowns in November 2022 led to production stops at VW plants, including in Chengdu and Changchun. In addition to the production stops and closed VW plants, other reasons that hampered production were supply chain problems, particularly in the area of semiconductors. Volkswagen China was exposed to delays in the production of electric cars due to persistent chip shortages. Direct and indirect consequences of Corona were the reasons why VW's sales in China fell sharply. VW and Uyghurs: How dependent is Volkswagen on China? Volkswagen has been operating a plant in Urumqi, Xinjiang, since 2013. With the emergence of reports of human rights violations, oppression and forced labor of Uyghurs since 2019, Volkswagen has also come under pressure. Since then, associations, NGOs and human rights activists have been calling for the closure of the VW plant in Xinjiang. Volkswagen rejects the criticism and points out that no human rights violations such as forced labor have been recorded at VW. On the contrary, the company is improving the situation of local people. China is Volkswagen's largest sales market; around half of all VW cars are sold in China. However, due to the joint venture with Chinese companies, the Chinese Communist Party (CCP) also has influence over the company. According to critics, the VW plant in Xinjiang is also seen as a guarantee for Volkswagen to be able to secure further sites in China. At the same time, however, pressure from the German government on Volkswagen is also growing. In May 2022, VW was denied investment guarantees in China due to VW in Xinjiang and the human rights violations against Uyghurs. What does Volkswagen's future in China look like? In addition to corona and the human rights violations against Uyghurs in Xinjiang, the increasing digitalization and software in e-cars is a pressure factor for Volkswagen in China. Car brands such as BYD and Tesla are ahead of Volkswagen in the areas of electromobility and autonomous driving. This is why Volkswagen entered into a joint venture with Horizon Robotics, a software company specializing in artificial intelligence, in 2022. Volkswagen has a high market share in China. However, corona, VW's involvement in Xinjiang, chip shortages and growing competition in the field of electromobility and autonomous driving are also creating problems for Volkswagen. Here you can find all Volkswagen China news!
