According to a report, the Dax group has been asked by the People’s Republic to stop the use of components manufactured in the EU country Lithuania.
(Photo: imago images / Schöning)
Brussels, Düsseldorf The conflict between China and Lithuania over Taiwan has reached a new level of escalation. Companies that produce for the Chinese market in the Baltic EU country could have problems exporting the goods to China. This means that German companies are also involved in the political dispute.
The Continental gets to be felt. The Dax group had been asked by the People’s Republic not to use any components manufactured in Lithuania, it said on Friday in group circles. Deliveries from the Lithuanian factory to China would no longer be allowed. The Reuters news agency reported on it first. The group did not want to comment at first. In the early afternoon, Continental shares were down around 1.8 percent.
The starting point of the conflict is China’s claim to Taiwan. The communist dictatorship regards the democratic island state as part of the people’s republic. The Lithuanian government, on the other hand, had Taiwan opened a so-called liaison office in November, which in fact corresponds to an embassy.
The Chinese Foreign Ministry then sharply attacked Lithuania for its stance on Taiwan. Diplomatic relations with the Baltic state were downgraded and consular services were suspended. On Thursday, 20 Lithuanian diplomatic representatives apparently left the People’s Republic in a hurry. Lithuania said the embassy in China would be temporarily operated remotely.
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Popular location for German suppliers
The Kaunas region in Lithuania is a popular location for auto suppliers. In addition to Continental, Hella and Bosch also operate large plants there. Conti laid the foundation stone for the Lithuanian plant in 2018. The supplier is investing 95 million euros there over five years and aims to create up to 1,000 jobs. Electronic components are manufactured for the division that deals with networked and automated driving. This also includes telematics units, for example.
According to Conti, however, the plant will not produce exclusively for the Chinese market. Therefore, production restrictions are not to be expected, it said in corporate circles. In order to be able to continue delivering to China, the capacities would now be shifted to other plants instead.
The political conflicts exacerbate the already tense situation for suppliers due to raw material and chip shortages. Companies can solve the latter problems themselves. The dispute with China, on the other hand, has a diplomatic origin and must be resolved politically, according to industry circles.
Meanwhile, the European Commission has backed Lithuania. “Such practices are not acceptable and must be reversed,” a spokeswoman clarified on Friday. China has already been contacted for further information and just as informally spoken with the World Trade Organization. “If our requests are not heeded, we will officially complain to the WTO,” the spokeswoman continued. “China’s actions could endanger its reputation as a reliable trading partner.”
Crisis meeting in the Ministry of Economic Affairs
According to information from Reuters, a meeting will also take place next week in the Berlin Ministry of Economic Affairs. With a view to Continental, German companies are increasingly concerned that the conflict between Lithuania and China could also affect German-Chinese trade.
The Chinese Foreign Ministry denied having put pressure on multinational corporations. However, Chinese companies did not see Lithuania as a trustworthy partner. By viewing Taiwan as a separate country, the country is interfering in internal affairs and seriously injuring China’s core interests, a foreign ministry spokesman said.
According to data from Lithuanian business associations, China is blocking imports of goods from the country. Chinese customs no longer include Lithuania in its list of countries of origin, the president of the industry association, Vidmantas Janulevicius, complained at the beginning of December. Therefore, customs forms cannot be submitted for loads from Lithuania.
More: How little Lithuania messes with China