Volkswagen boss Oliver Blume visits China

Beijing, Dusseldorf Volkswagen boss Oliver Blume is in a hurry. As the first high-ranking business representative, the CEO of the automaker traveled to China after the end of the corona restrictions. Many others are still waiting. The head of the group has good reasons for the hurry. Because the China business of the largest German car manufacturer, which is so important, has recently weakened.

Although the Chinese car market grew by two percent to around 21 million vehicles in 2022, the group’s sales in its most important market have fallen for the third year in a row – most recently to a nine-year low of 3.18 million cars. VW still makes most of its money from the sale of petrol and diesel vehicles.

In the rapidly growing electronics segment, however, competitors such as US supplier Tesla or China’s electronics brand BYD are ahead in the People’s Republic – also because they understood better than VW how to address Chinese customers via digital gadgets.

For VW boss Blume, China therefore occupies an important place on the list of priorities. Volkswagen has “developed far-reaching strategies and concrete programs” for the People’s Republic, he said in an interview with the Handelsblatt at the end of January.

VW China boss Ralf Brandstätter expects growth again this year due to the opening of the country. However, in view of the ever-increasing competition from Chinese manufacturers, especially in the rapidly growing market for electric vehicles, the group must come up with something – and must not lose the trust of its Chinese partners.

>> Read about this: VW deliveries in China fell to a nine-year low

As the “Business Insider” portal reports with reference to those in the know, VW is planning to establish a premium brand in the electric car segment in China alongside the ID family. This should transport more “lifestyle” and appeal to a younger audience. In contrast, the Skoda brand is under scrutiny in China. There is always speculation as to whether the VW subsidiary will withdraw from China. However, no decision has been made on this, according to the group.

Blume flew to China on Sunday and will remain in the country until this Friday. The group speaks of an “inaugural visit”. The program for his five-day stay is tight: Blume met with the three Chinese joint venture partners FAW, JAC and SAIC, but also with government representatives.

In addition to Beijing and Shanghai, the VW boss therefore traveled to Changchun in northern China and to Hefei. He does not visit the controversial plant in western China’s Xinjiang, for which VW has been sharply criticized for human rights violations against the Uyghurs there.

Flower on a diplomatic mission

Blume primarily wants to reach the Chinese audience with his messages. spoke on his journey the VW boss therefore exclusively with Chinese media. Blume praised and highlighted relations between China and Germany, reports the Global Times, the English-language organ of the Communist Party. Both countries have a strong basis for their cooperation.

>> Also read: “We need China” – VW subsidiary Traton wants to expand business in the People’s Republic

In Germany, on the other hand, the Group’s high dependence on the Chinese market was recently criticized. The political tensions between China and the USA in particular have grown in recent months. Blume is looking for the difficult balancing act of making the group more balanced worldwide on the one hand, without angering the Chinese partners.

China is still the “most important market” for Volkswagen, said Blume according to the Chinese state news agency Xinhua during his visit to Changchun. In good years, the group sells almost every fourth new car in China. Alongside BASF and Mercedes, Volkswagen is one of the largest European investors in China. In the past four years, VW has always been one of the three leading German companies in China, according to a study by the think tank Rhodium.

After the outbreak of the corona pandemic, China had largely isolated itself from the outside world for almost three years. Anyone who wanted to travel to China had to be in quarantine for several weeks. Most company bosses have therefore not been in the People’s Republic since 2020. Now the pressure is great to get your own impression of the local business.

protests against China

Dealing with the Uyghurs has been harshly criticized internationally. VW has a plant in the region.

(Photo: imago images/ZUMA Wire)

In November, Chancellor Olaf Scholz traveled to China with a business delegation, and VW boss Blume was also there at the time. Since China was still pursuing a strict zero-Covid policy at that time, the participants, including the heads of BASF, BMW and Siemens, were only allowed to move in Beijing in a “bubble” that was strictly sealed off from the outside world.

Many company bosses are waiting to visit China

Only BASF boss Martin Brudermüller was in China for a short visit in September last year. At that time, he received a special permit for the inauguration of the new plant at the Zhanjiang site. All participants in the meeting who stayed in China had to be quarantined afterwards. BASF will invest a total of ten billion euros in the new Verbund site in southern China by 2030.

Unlike Blume, many business leaders are still reluctant to travel to China despite the opening, observes Jens Hildebrandt, executive board member of the German Chamber of Commerce in China (AHK). He cites the confusing corona situation in the People’s Republic as the reason and refers to the travel warning from the Federal Foreign Office, but also the more China-critical mood in Germany.

He expects an increase in visits by business delegations to China from March. Because then the new government will take office and with it possible new dialogue partners for companies. The China Development Forum and the Economic Forum will then take place in Bo’ao, Hainan.

More: This is how VW wants to lead the icons Golf, GTI and Tiguan into the e-age

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