German companies increase investment in China, acting against decoupling voices of Washington

While the U.S. seeks to decouple with China, and German Chancellor Olaf Scholz aims at reducing dependency on Chinese imports, two German economic engines have strengthened their ties with China, according to an article issued by New York Times on April 12, 2023.

Visitors walk by an FAW-Volkswagen new energy vehicle during the 19th China (Changchun) International Automobile Expo in Changchun, capital of Northeast China's Jilin province, July 18, 2022. (Photo/Xinhua)

Volkswagen was one of the first foreign auto manufacturers to enter China and has greatly benefited from the huge Chinese market. Data shows that Volkswagen makes about 40% of sales and one-third of its profits in China.

Volkswagen will provide tailored vehicles for Chinese buyers, and plans to invest billions in its Chinese partners and local production sites, as part of the carmaker's strategy "In China for China," the New York Times reported.

In addition to the existing multiple production facilities in China, German chemical company BASF plans to invest 10 billion euros in building a new production base in China, which matches the size of the company's headquarters in Ludwigshafen, Germany.

Both companies have been bearing losses in Europe. Revenues from China have been supporting their business in Europe.

"Without the business in China, the necessary restructuring here (Europe) would not be possible," Martin Brudermüller, BASF's chief executive, told reporters at his company's annual earnings conference in February.

The BASF site under construction in Zhanjiang, Guangdong Province, involves an investment of $10 billion from the German chemical giant. (Photo/Xinhua)

China has been Germany's biggest trade partner for seven years in a row. In 2022, bilateral trade volume hit 297.9 billion euros ($329.5 billion), an increase of 20.9 percent.