IF YOU CAN’T BEAT THEM, JOIN THEM?
Meanwhile, European companies cutting jobs at home are expanding their operations in China despite mounting domestic pressure. Volkswagen, for example, has announced plans to cut 100,000 jobs by 2030, citing high costs, weak demand and fierce competition from Chinese carmakers.
Yet the German automotive giant continues to invest heavily in China, including 3.5 billion euros in its research and development hub in Hefei, its largest R&D facility outside Germany, and 2.4 billion euros in a joint venture with Chinese technology company Horizon Robotics.
Joerg Wuttke, a partner at the DGA-Albright Stonebridge Group and ex-president of the EU Chamber of Commerce in China, argues that European companies have little choice but to deepen their presence in China.
“You want to be competitive in the biggest car market in the world in order to then be competitive against Chinese competitors in third markets,” he says.
“Volkswagen and others are exporting from China into the Southeast Asian economies. They wouldn’t be competitive if this would come out of Europe because of the high euro, but also because of the cost structure that you face in Europe.
“What’s the companies’ decision? Of course they want to stay in business. Of course they want market share, hence they have to be more Chinese. And hence the investment has to go up.”
