FRANKFURT/BERLIN, Jan 16 - Chinese officials and carmakers are eyeing German factories slated for closure and are particularly interested in Volkswagen plants, opening a new tab, a person familiar with the Chinese government's thinking told Reuters.
Buying the factory would allow China to build influence in Germany's prized auto industry, home to some of the oldest and most prestigious car brands, the person said.
Chinese companies are investing in a range of sectors in Europe's largest economy, from telecoms to robotics, but have not yet set up traditional car manufacturing here, even though Mercedes-Benz has two large Chinese shareholders.
Any such move could represent China's most politically sensitive investment to date. VW has long been a symbol of German industrial prowess, now threatened by a global economic slowdown that has hit demand and a creaking transition to green technology.
Producing cars in Germany for sale in Europe would allow Chinese EV manufacturers to avoid paying EU tariffs on EVs imported from China and could pose a further threat to the competitiveness of European manufacturers.
Bids could come from private companies, state-owned enterprises or joint ventures with foreign players, but the Chinese authorities reserve the right to approve certain investments abroad and are likely to be involved in any bid from the start of the process.
The investment decision will depend on the attitude of the new German government towards China after the February elections, he said.
The two economies have become deeply intertwined during Angela Merkel's sixteen years in power, helped by investment and exports by German carmakers to China.
But relations have cooled as the current coalition seeks to reduce dependence on China. Foreign Minister Annalena Baerbock called President Xi Jinping a "dictator" and China a rival.
A German foreign ministry source said that China has developed into a systemic rival.
Volkswagen is exploring alternative uses for its Dresden and Osnabrück plants as part of its efforts to cut costs and reduce its German operations. Europe's biggest carmaker, which owns brands such as Porsche, Audi and Skoda, has suffered a drop in sales due to growing competition from Chinese companies.
VW management wanted to close several plants but ran into resistance from the unions. In a deal struck before Christmas, they agreed to end production from 2025 in Dresden, where 340 employees work and where the ID.3 electric model is built, and from 2027 in Osnabrück, where 2,300 employees build the T-Roc Cabrio.
VW would be open to selling the Osnabrück plant to a Chinese buyer, a person familiar with the company's thinking told Reuters.
"We are determined to find another use for the site. The goal must be a viable solution that takes into account the interests of the company and the employees," the spokesman said, declining to comment specifically on speculation about the offer.
The Chinese companies are worried about how they would be received by German unions, which hold half the seats on the advisory boards of German companies and are seeking far-reaching guarantees on the site and jobs, said a person familiar with Chinese considerations.
Stephan Soldanski, a union representative from Osnabrück, said the plant's workers would not object to producing for one of Volkswagen's Chinese joint venture partners.
"I can imagine us producing something for a Chinese joint venture ... but under the VW logo and to VW standards. That's a key condition," He said.
China is trying to open the door
A spokesman for the Chinese Foreign Ministry said that companies wishing to invest in Germany should be able to do so.
"China has introduced a series of opening-up measures to create new business opportunities for foreign companies ... We hope that the German side will also keep an open mind (and) provide Chinese companies with a fair, equitable and non-discriminatory business environment for investment," the spokesman said in a statement to Reuters.
A source familiar with the Chinese government's thinking, who spoke to Reuters on condition of anonymity because of the sensitivity of the matter, declined to name specific potential investors.
Asked about the person's comments, the Chinese Chamber of Commerce in Berlin confirmed that Chinese investors are very interested in the German automotive sector and consider it a strategically important long-term investment prospect.
They added that many Chinese carmakers believe that attracting discerning German consumers is a key indicator of success.
Selling the plants could be cheaper for VW than closing them, a banker familiar with the carmaker said, adding that it could get 100 million to 300 million euros ($103 million to $309 million) for each.
Volkswagen did not comment on the value of the assets.
Stephan Weil, the premier of Lower Saxony and a member of VW's supervisory board, declined to comment.
Chinese EV manufacturers looking for sites
A number of Chinese carmakers are looking to locate their plants in Europe, the world's second-largest market for electric cars, to circumvent tariffs imposed last year by the European Commission against what it says are unfair subsidies in China.
Most of them have so far chosen to build new factories in countries with lower costs and weaker unions, such as BYD in Hungary and Turkey. Leapmotor is planning production with Stellantis in Poland, and Chery Auto will start making electric cars this year at a plant formerly owned by Nissan in Spain.
Chinese investors have already toured plants in Western Europe, according to a separate source familiar with the talks, including Ford (F.N), which is opening a new plant in Saarlouis, Germany, and Volkswagen's Audi plant in Brussels.
Sources told Reuters in November that Leapmotor was considering using a plant in Germany to produce electric vehicles.
Chery told Reuters it was considering various options for production in Europe and expected to make a decision this year.
Its top European executive told Reuters last October that while it would be quicker to buy the existing plant, a new plant would allow Chery to produce to the latest standards.
BYD told Reuters it has long-term European goals that are largely independent of short-term national politics.
Reuters/ gnews - RoZ
ILLUSTRATIVE PHOTO - pixabay
English 
Czech 
Spanish 
French 
Italian 
German