Sharing China’s Opportunities—Foreign-funded automobile companies continue to increase investment and expand production in China, and increase their exposure to the Chinese market
In early May, on the assembly line of BMW Brilliance Dadong Factory in Shenyang, Liaoning, a matte gray innovative pure electric BMW i5 car slowly drove out. On the large sapphire blue electronic screen behind it, the words "6000000" flashed, and the audience burst into applause.
This year marks the 30th anniversary of the German BMW Group’s entry into the Chinese market. BMW Brilliance Automotive Co., Ltd. has welcomed its 6 millionth vehicle off the assembly line.
In addition to Germany's BMW, many foreign car companies have increased investment and construction in China: Volkswagen Group has set up the largest R&D center outside its German headquarters in China, focusing on the research and development of intelligent connected cars; Tesla's Shanghai Gigafactory has become Tesla's main export in the world Center, accounting for more than half of its global production capacity in 2023...
This is not only a "vote of confidence" in the Chinese economy by the world's leading car companies using real money, but also reflects the strong attraction of the ultra-large Chinese market.
From 1994 to 2024, the German BMW Group has witnessed the development process of China's automobile market and automobile manufacturing industry from small to large, from weak to strong.
This is the scene of the rolling off line ceremony for BMW Brilliance’s 6 millionth vehicle. Photo by reporter Pan Yulong
In 2023, China's automobile production and sales will reach 30.161 million vehicles and 30.094 million vehicles respectively, with annual production and sales both hitting record highs. This year, the BMW Group delivered more than 820,000 BMW and MINI cars in the Chinese market, accounting for approximately 32% of its total global sales.
"China is BMW's second home." Looking back on the history of the BMW Group taking root in China, BMW Group Chairman Zipse said, "Without China, BMW's development strategy would not be realized."
On April 26, 2024, BMW electric vehicle products on display were taken at the signing ceremony to deepen strategic cooperation with the BMW Group in Shenyang, Liaoning Province. Photo by reporter Pan Yulong
In recent times, investment and construction by foreign-funded automobile companies have accelerated:
In January, pre-volume production of Audi FAW New Energy Vehicle Co., Ltd. was officially launched;
In March, the joint venture established by Mercedes-Benz and BMW settled in Beijing and plans to jointly build at least 1,000 super charging stations and approximately 7,000 super charging piles by the end of 2026;
In May, Volkswagen Technology Co., Ltd. held a groundbreaking ceremony for the third phase of the project in Hefei, Anhui...
This is the urban test track of Volkswagen Technology Co., Ltd. taken on May 16, 2024. hair
The rapid business development of foreign-funded automobile companies has also driven the continued growth of supporting industries.
At the Shenyang factory of the French Michelin Group, the reporter saw a yellow robotic arm operating skillfully. It picked up the produced tires and arranged them neatly one by one. The arranged tires are then transported by forklift to the truck for shipment. Robotic palletizing greatly improves the efficiency of finished tires being shipped out of the warehouse.
The Michelin Shenyang factory is the largest investment project of the French Michelin Group in China. It is mainly engaged in the production of high-performance, green radial passenger car tires. Its production capacity will reach 16.3 million units in 2023.
Against the background of sluggish global economic recovery, China's total foreign investment attraction still accounts for more than 10% of the world's total, maintaining a high level for many consecutive years. A survey by the European Chamber of Commerce in China shows that 59% of the companies surveyed still regard China as one of the three main investment destinations.
The reason why the world's leading auto companies continue to invest in China is not only China's huge auto market, but also the positive signals released by China's promotion of high-level opening up, and the business environment that has been continuously optimized for a long time.
——The ultra-large Chinese market has attracted automobile giants to increase capital and expand production. Statistics show that China's automobile production and sales have ranked first in the world for 15 consecutive years. Not long ago, Kallenius, Chairman of the Board of Directors of Mercedes-Benz Group AG, accompanied German Chancellor Scholz to visit China. Kallenius was deeply impressed by the Chinese market. He said that companies have continued to invest in the Chinese market, investing a total of 10.5 billion yuan in the past five years, focusing on cutting-edge R&D areas such as electrification and intelligence, while promoting Chinese R&D to feed back to the world.
In 2003, BMW Brilliance Automobile Co., Ltd. was established in Shenyang. At that time, it adopted an asset-light investment strategy of renting production lines. Sensing China's vitality, BMW's Shenyang production base has made substantial additional investments. Since 2010, the cumulative investment has reached 105 billion yuan, and Shenyang has become the BMW Group's largest production base in the world.
——Opening the door wider and wider reveals China’s opportunities and dividends. At the Tesla Pavilion Experience Store in Dalian, citizen Liu Jie is test driving a Tesla Model 3 electric car. “More and more friends are buying electric vehicles, which not only saves energy and environmental protection but also saves vehicle costs,” he said. Ten years ago, there were few Tesla cars on the streets of China. Today, the number of Tesla owners in China exceeds 1.7 million.
The construction site of Tesla's Shanghai Energy Storage Gigafactory photographed on May 23, 2024. Photo by reporter Fang Zhe
Tesla CEO Elon Musk said that Tesla’s Shanghai Gigafactory is Tesla’s best-performing factory, thanks to the hard work and wisdom of the Chinese team. Tesla is willing to further deepen cooperation with China and achieve more win-win results.
The opening ceremony of Tesla's Shanghai Energy Storage Gigafactory taken on May 23, 2024. Photo by reporter Fang Zhe
Beginning in 2018, China has abolished restrictions on foreign ownership of new energy vehicle manufacturing, and many foreign car companies have invested in electric vehicle production in China. In recent years, my country has worked hard to create a market-oriented, legal and international first-class business environment, further relaxed market access, implemented national treatment for foreign-invested enterprises, maintained and promoted fair competition, and opened the door wider to the outside world.
——The continuously optimized business environment allows foreign-funded automobile companies to “have their home in China”. In the first quarter of this year, there were 12,000 newly established foreign-invested enterprises in my country, a year-on-year increase of 20.7%. In recent years, the State Council has issued policy documents such as the "Opinions on Further Optimizing the Foreign Investment Environment and Increasing Attraction of Foreign Investment". The business environment in various places has been continuously optimized, which has strengthened the confidence of foreign-funded enterprises to deeply explore the Chinese market.
Brons, director of battery cell trial production at Volkswagen Automatic Transmission Co., Ltd., said that in 2023, they successfully set up the Volkswagen Group's world's first battery cell trial production line in Dalian. This represents a historic step for the company to transform into the production of new energy automobile parts.
"We are amazed by the efficient work efficiency of Dalian Jinpu New District and praise the high-quality investment environment." Brons said.
As China actively cultivates and develops new productive forces, the industrial structure continues to be optimized and upgraded, and the automobile industry moves toward high-end, intelligent, and green industries, many foreign-invested automobile companies in China have adjusted their development strategies to achieve win-win cooperation with Chinese partners.
——Localization and firm choice of China. Faced with the demand for green development and technological innovation in the Chinese market, many foreign-funded car companies have seized the opportunity and taken advantage of the situation.
The BMW Group stated that its new investment of RMB 20 billion in April will be used for large-scale upgrades and technological innovation at BMW Brilliance's Dadong plant in Shenyang, laying a solid foundation for starting localized production of BMW's "new generation" models in 2026.
"With the rapid development of China's automobile industry, BMW Brilliance's localization strategy is the right choice for its own transformation and upgrading. It is also conducive to competitive development and mutual promotion with local Chinese automobile companies." said Zhang Wanqiang, vice president of the Liaoning Academy of Social Sciences.
The localization rate of Tesla's Shanghai Gigafactory's industrial chain exceeds 95%. It has established a "4-hour circle of friends" in Shanghai, Suzhou, Ningbo, Nantong and other Yangtze River Delta regions, covering new technologies such as batteries, vehicle chips, and autonomous driving systems. A full ecological chain of energy vehicle parts.
——Intelligent and actively join hands with China. As the demand of Chinese consumers continues to increase, many foreign car companies are either accelerating transformation and upgrading, or joining forces with local Chinese companies to keep up with the market through intelligent transformation.
On April 11, Volkswagen Group announced that it would invest 2.5 billion euros to further expand its production and innovation center in Hefei, Anhui, strengthen local R&D capabilities, and accelerate the production of two Volkswagen brand smart electric models jointly developed by the Group and Xpeng Motors. Production; On April 19, the Mercedes-Benz Shanghai R&D Center officially opened a new building to further accelerate intelligent innovation in China.
On April 25, 2024, at the 2024 Beijing Auto Show held at the Shunyi Pavilion of the China International Exhibition Center in Beijing, the Mercedes-Benz CLA-Class concept car was unveiled. Photo by reporter Cai Yang
Yin Tongyue, chairman of Chery Holding Group, believes that China is undoubtedly an indispensable link in the global industrial and supply chains. "I believe that an important way for many foreign-funded enterprises to implement globalization strategies is to 'hand-in-hand' cooperation with China."
——Go green and benchmark against China in the future. In 2023, my country's new energy vehicle production and sales will be 9.587 million and 9.495 million respectively, ranking first in the world for 9 consecutive years.
At the 2024 Beijing International Auto Show, Mercedes-Benz debuted a number of models making their world premiere and China debut. Digital and electrified new models have become highlights. Mercedes-Benz stated that its determination to promote electrification transformation has not changed and it will continue to increase investment in the field of electrification.
Ferdinand Dudenhoefer, an authoritative German automotive economics expert and president of the Bochum Automotive Research Institute, said that China's electric vehicle market is far from saturated and will continue to maintain a faster and stronger growth momentum than the European and American markets.
"The development of China's new productive forces and the construction of a unified market have brought new opportunities to foreign auto companies. Increasing investment and expanding production in China is also a strategic choice for them to base themselves in China and be optimistic about the future." said Sun Lijian, director of the Financial Research Center of Fudan University.
