China advises carmakers not to invest in Europe

At a meeting with the industry, Beijing advised against building car plants abroad. At the same time, an agreement on customs duties is being sought.

Photo by: Geely

By: Riccardo Ciriaco

Published by: Brian Potter

Sep 14, 2024 at 3:37am ET

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"Be on your guard" may not have been the exact words uttered, but this is how China's Ministry of Commerce is urging local businesses to close ranks against hostile (or supposedly hostile) countries.

The warning was issued at a meeting held at the beginning of July (details of which have only now been revealed by the Reuters press agency) during which Beijing warned manufacturers of the potential risks of investing abroad, particularly in India, Russia and Turkey.

And Europe? To be avoided, as should Thailand, even if the dangers associated with building car plants in these regions appear to be fewer than elsewhere. It is also advisable to use plants located on foreign soil only for the final assembly of vehicles, and to avoid problems in the event of geopolitical tensions.

In search of sites

China's warning comes at a time when some brands are seeking to expand their activities on the Old Continent by looking for suitable sites for new factories. This is the case for Geely which, according to its vice-president Li Chuanhai, is carefully studying the possibility of a new site, without making a 100% commitment. One destination could be Poland, but this remains to be seen.

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Chery is also studying the possibility of diverting funds, and if so how much, beyond national borders. The aim of all is to increase business abroad, which is struggling in the country due to the overproduction crisis.

Tariff chapter

Europe, the United States and Canada are reacting by imposing additional customs duties, to the extent that the Chinese Minister of Commerce, Wang Wentao, will be travelling to Brussels on 19 September to meet the Vice-President of the European Commission, Valdis Dombrovskis, and reopen negotiations on the imposition of new taxes.