Chinese firms eye Volkswagen's German plants amid EU tariff woes

Purchasing a factory in Germany would open entirely new opportunities for Chinese companies, granting them access to the largest automotive industry in Europe. Equally important seems to be avoiding the high EU tariffs currently imposed on electric cars from China.

For years, Chinese companies have invested in various German industries, from telecommunications to robotics, but thus far, they have not commenced traditional car production there. It is conceivable that this could change in the coming years.

According to sources cited by "Reuters," the Chinese are interested in purchasing at least one of the two Volkswagen factories scheduled for closure. These refer to the plants in Dresden and Osnabrück.

The German company is compelled to halt production at these factories as part of a cost-cutting initiative. Selling the plants could prove more profitable than closing them.

"We are determined to find further use for this site. The goal must be a viable solution that considers the interests of the company and employees," said a Volkswagen spokesperson in a conversation with "Reuters," while declining to comment on a potential acquisition by a Chinese company.

Chinese companies are concerned about how they will be received by German labour unions, which occupy half of the seats on advisory boards of German companies and demand extensive guarantees for location and jobs, according to a person familiar with the Chinese perspective.

Stephan Soldanski, a representative of the Osnabrück labour union, said that the factory workers would not mind producing for one of Volkswagen's Chinese joint venture partners, but with one condition.

"I can imagine that we could produce something for a Chinese joint venture, but under the VW logo and according to VW standards. That is the key condition," he said.

However, frosty relations between the two countries' governments could hinder an agreement. The current Foreign Minister Annalena Baerbock described President Xi Jinping as a "dictator" and China as a rival. Much depends on the outcome of the February parliamentary elections and whether the current government remains in power.

Germany is not the only example of a country where the Chinese are attempting to extend their influence. So far, Chinese companies have opted for countries with lower labour costs and weaker labour unions, such as Hungary, Turkey, or Poland. If they manage to enter Germany, it would be an unprecedented event that could have significant consequences for the European automotive industry.