European manufacturing industries increase investment in China and take the lead in laying out market opportunities

On October 25, six departments including the National Development and Reform Commission issued the “Several Policies and Measures on Focusing on the Manufacturing Industry to Promote the Expansion of Foreign Investment, Stabilize the Stock and Improve the Quality”, which released the efforts to increase investment in the manufacturing industry and promote the use of foreign capital for high-quality development. positive signal.

Figure | BMW 

Image source: U-CAR News

The Chinese market plays an important role in the search for future technologies. China has been the global new energy vehicle market for many years, and it is also in the leading position in the field of intelligent networking and autonomous driving. In addition to traditional advantages such as market size and production costs, the diversified needs of consumers can further promote companies to develop innovative products. Therefore, more and more foreign-funded enterprises choose to conduct innovative research and development in China, and reversely promote their technological achievements to the global market. What is the attraction of foreign investment in China? What advantages will it bring?

Germany is Europe’s largest investment in China

Figure | Daimler

Image source: Sohu 

It is reported that four German auto giants Volkswagen, BMW, Daimler and chemical giant BASF account for 34% of all European direct investment in China.

It is reported that BMW has decided to stop the production of MINI electric models at the Oxford plant in the UK and expects to transfer the production line to China by the end of next year. According to BMW China insiders, BMW will invest another 10 billion yuan to expand its high-voltage battery production center in Shenyang and expand its investment in battery projects in China. This will be BMW’s third complete power battery center in the world and the first outside of Germany. Prior to this, BMW’s third vehicle plant in Shenyang, the BMW Brilliance BMW Lida Plant, has officially opened. With a total investment of 15 billion yuan, the project is BMW’s largest investment project in the Chinese market, and Shenyang has also become BMW’s largest production base in the world.

According to data from the German Central Bank, in the first half of this year, Germany’s investment in China reached 10.1 billion euros (1 euro is about 7.2 yuan), a record high. Germany looks to China again. For Chinese cities that are actively deploying industrial transformation and upgrading, this also means that new opportunities are coming.

In the era of fuel vehicles, 40% of BMW’s overall sales came from China. However, as the new energy vehicle industry continues to grow in China, car companies such as Tesla in the United States and BYD in China continue to overshadow BMW. In the field of electric vehicles, more German companies are also increasing their investment in Chinese cities. In June this year, the Audi FAW new energy vehicle project started in Changchun, which is Audi’s first production base in China dedicated to the production of pure electric vehicles; not long ago, Volkswagen announced that it would invest about 2.4 billion euros to set up a joint venture in the field of autonomous driving, which is also its The largest single investment in China in 40 years.

This also means that in addition to the accelerated expansion of the market, the automobile manufacturing base of Chinese cities is undoubtedly the key to the capital increase of German car companies. Cui Dongshu, secretary-general of the National Passenger Vehicle Market Information Association, once analyzed the media that the transfer of the production line of BMW MINI electric vehicles may be due to the “incomplete British industrial chain and high cost”; while BMW and Audi increased capital in Shenyang and Changchun, both It is China’s old-fashioned “car capital”.

The high domestic demand market ushered in a bright moment

Figure | BYD

Image credit: Portal Movilidad

Overall, my country has a good innovation environment and domestic demand potential. Foreign-funded enterprises have always been optimistic about China’s economic development prospects and continue to increase investment in China, providing strong support for the development of the industrial chain. Major foreign-funded projects play an obvious leading role. According to the latest data from the Ministry of Commerce, in the first seven months, the actual foreign investment in major projects with contracted foreign capital of more than 100 million U.S. dollars nationwide reached 66.85 billion U.S. dollars, a year-on-year increase of 35.0%, accounting for 53.9% of my country’s actual use of foreign capital during the same period.

In addition, CATL and NIO have also preemptively deployed in the European market. On September 5, CATL, a Chinese power battery manufacturer, signed a pre-purchase agreement in the eastern city of Debrecen, Hungary, to start the CATL Hungary factory project. At the same time, the representative of the “new power” of China’s new energy vehicles, the NIO European plant invested and constructed by NIO in Pest, Hungary, completed the first power exchange off the assembly line.

Figure | Top 10 in “2021 Hurun China Top 500”

Image source: Hurun Research Institute

Electric vehicles have been one of the fastest-growing industries globally over the past year. The electric vehicle market is booming, and its related industrial chain is also in full swing. In the past year, under the favorable “dual carbon” policy, CATL has become a benchmark enterprise of China’s green economy. In addition, CATL is one of the most concerned listed companies in China’s capital market in the past two years, and it is also the only company with a market value of more than 1 trillion yuan currently listed on the Growth Enterprise Market. In 2021, CATL will realize a net profit of 14 billion to 16.5 billion yuan, a year-on-year increase of 150.75% to 195.52%.

according to

“2021 Hurun China Top 500”

It shows that CATL entered the top ten for the first time, and its value increased by 2.5 times to 1.5 trillion yuan last year, and its ranking rose six places to fifth. Compared with foreign electric vehicles, the core advantages of Chinese electric vehicles are mainly reflected in technology. In 2021, Chinese new energy vehicle companies will obtain more than 30,000 related patents, accounting for 70% of the total global related patents. Specifically in the field of electric vehicles, China is far ahead of European and American countries in terms of vehicle technology levels such as dedicated platforms for pure electric vehicles and fuel cell vehicles, as well as in key core technologies such as power batteries and third-generation semiconductors. Leader in the electric vehicle industry.

Cooperation between Chinese and European enterprises to embrace future transportation changes

Figure | SAIC Volkswagen

Image source: Sohu 

Investments in Europe are also starting to become more concentrated in a few major industries, especially high-end technology manufacturing. Five industries, including automotive, food processing, pharmaceutical/biotechnology, chemicals and consumer goods manufacturing, now account for nearly 70% of all European direct investment in China, up from 65% in previous years. Among these industries, the automotive industry has performed particularly well. The industry has accounted for about a third of all European direct investment in China for the past two years.

As the European new energy vehicle market continues to expand, the demand for power batteries continues to increase. However, China has a complete industrial chain, a huge market scale, and relatively low manufacturing cost advantages. It has macro advantages for global companies, especially European companies. Especially when Europe is facing the European energy crisis, it is more favorable for the current situation. develop.

In addition to pure electric vehicles, methanol vehicles are also seen in Europe as an effective way to accelerate the realization of carbon neutrality in the transportation sector. In May this year, at the Stuttgart Gas Station Facility and Car Wash Equipment Exhibition in Germany, a car from China was parked in a prominent position at the Circle K booth of a chain gas station company. This is a methanol fuel vehicle independently developed by Geely Group. According to Shure Haugen, director of European fuel development at Circle K, this is the first time that methanol fuel vehicles have participated in the Stuttgart Gas Station Facility and Car Wash Exhibition. In Stuttgart, Germany, the test cars of the Chinese self-driving technology company Momenta are now being tested on local streets every day. Based on the data-driven “flywheel” technology, the company can automatically and cost-effectively solve the problem of differences in road scenes and driving habits between China and Europe, allowing autonomous driving algorithms to “do as the locals do” in Europe. According to Sun Huan, general manager of Momenta Europe, in the real vehicle test of a European project, the Momenta closed-loop automation tool chain automatically performs data screening, labeling, training and integration in the background, and automatically iterates the original algorithm problems. “We only took a week to solve the problem that the conventional process takes a quarter.” Sun Huan said.

The car is being redefined by software and chips as an entirely new product. In order to avoid being disconnected from the future of transportation, joint projects between German and even European companies and China are indispensable, especially in the field of autonomous driving technology.

While attracting foreign investment to China, it is necessary to continuously promote a higher level of opening up and expand the scope of foreign investment. It is important to provide foreign enterprises with more optimized services and a more convenient business environment. Improve the quality of foreign-funded projects through the guidance of industrial policies, and promote the transformation and upgrading of the domestic industrial structure. In addition, continuously expand the field of foreign investment, provide policy support such as land use and environmental impact assessment for high-end industries and advanced technology industries, and expand capital interaction, technical exchanges, and management improvement between Chinese and foreign enterprises through foreign investment.

Source: International Online, China Business News, China Central Broadcasting Corporation, Yingwei Caiqing, People’s Daily Online