From
George Castro
International analyst
Volkswagen (VW) – which today includes Porsche and Audi – is the automaker that sells the most vehicles in the People’s Republic, but just lost the leadership in the world’s largest market (22 million units sold in 2022) to BYDthe Shenzhen-based conglomerate whose minority partner is Warren Buffett, “the Sage of Omaha” and a leading investor in global capitalism.
The key point of difference between Volkswagen and BYD is that the latter holds 40% of the electric vehicle (SUV) market in the People’s Republic, while VW holds only 2% of the total.
This occurs when the European SUV market is at stake; AND while Chinese exports to Europe grow phenomenally and are expected to reach 3 million units in 2023.
What’s happening with SUVs is a preview of what’s to come in the global auto market, where Chinese dominance as the world’s largest manufacturer and exporter is set to peak in 2030, or sooner.
The Chinese market is absolutely essential for Volkswagenwhose profits amounted to over 25,000 million dollars in 2022 and 60% came from the People’s Republic.
Strictly speaking, Volkswagen’s fate depends on what happens to its electric vehicles in China.
Needless to say Volkswagen is the top brand of the German automotive industrywhich in turn is the productive heart of the Federal Republic, and one of the reasons – probably the main one – of its relevance in the world.
VW’s response to this existential challenge was multiply their investments in China, which last year amounted to 4.5 billion dollars and would double or more in 2023.
At the same time, VW established a high-tech center in the People’s Republic; and for this reason it acquired “Horizon Robotics” for 2.8 billion dollars, with the primary objective of developing autonomous vehicles (without a driver), on the basis of the assumption that public transport in large Chinese cities, and soon also in Europe, will be unit of these characteristics.
It should be added that VW will double the number of its highly specialized engineers and scientists to 1,200 around Horizon Robotics. In short, VW has decided to transfer the strategic axis of its activities from Germany to China.
The central feature of the Chinese car market is this he is totally dedicated to high technologyand is driven by an unceasing desire for innovation.
This happens not only with the large leading companies but also with the parts and components industry, even though it is the fundamental engine this compulsive desire for the new is consumers, especially China’s new middle class made up of more than 500 million people with incomes comparable to those of the United States (US$40,000/US$55,000 annually); and within it the youngest segment between 18 and 29 years is the most daringly innovative. It seems to fear nothing.
As for foreign investment, China is finally done with the “joint ventures”, e both VW and Tesla are fully foreign-owned companieswhile 100% Chinese.
That is why the “high tech” innovation center that VW has created in the People’s Republic is a company called “100% China Tecno”, whose laboratories develop the most advanced technology of the 21st century.
Therefore, VW characterizes its new production strategy with a sufficiently revealing name for this new phase of the globalization process: “In China and for China”.
The industry The German chemist followed the same course as Volkswagen. For this BASF, the largest chemical company in the Federal Republic and in the world, has announced that it will install a more advanced plant in China than its original unit in Ludwigshafen, with an initial investment of 10,000 million dollars, which plans to double its production in the next 5 years.
It should be added that BASF incurred Germany an extra 2,200 million euros to supply gas to its European plants, and when the Ukrainian war has triggered energy costs by more than 700% in the last 2 years.
The deterministic core of capitalism in the 21st century is this the axis of the system has definitively shifted from the G-7 (led by the USA) to China/Asia.
German industry assumes and is the protagonist of this central tendency of the time, in a show of historical vision, not unusual in the country of Hegel and Marx.
The future is always uncertain, but the course of events is unmistakable (“the future is the essence of the present,” says Peter Drucker).
In historical terms, the dispute between the United States and China is resolved in favor of the Eastbut that does not mean – supreme irony – the defeat of the US superpower, because the China/Asia that imposes itself does not attempt any Hitler-style world domination, but assert its status as a major global powerwhich displays its immense power through the splendor of its civilization and the innumerable achievements of its economy.
In that case it would be the “Middle Empire” of the 21st century.
Source: Clarin
