VW board member Brandstätter: "We must not weaken our position in China"

Tensions between China and the West are becoming a growing risk for foreign companies operating in the People's Republic.

Europe's largest automaker Volkswagen, which sells around 40 percent of its vehicles in the country, is now urgently warning against allowing the conflicts to escalate further.

Christian Muessgens

Business correspondent in Hamburg.

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"We must not intentionally weaken our position in China for political reasons," says Ralf Brandstätter, the responsible VW board member and country manager of the group in China.

“China will change its relationship with the rest of the world.

But decoupling cannot be the solution.”

The statements are explosive because the federal government is currently working on a new China strategy.

Mainly under pressure from the Greens, Berlin wants to tighten its pace compared to Beijing - and is thus antagonizing parts of the economy who fear for their business in the country.

Brandstätter refers to the Chinese car market, whose growth has slowed down recently, but which is still gaining in importance globally.

Concern about an escalation of the Taiwan conflict

Manufacturers in China sold 21 million cars in 2022, more than anywhere else in the world.

By 2030 at the latest, according to the forecast, there should be 30 million units.

With its combustion engines, VW has a market share of almost a fifth in the country and is also striving for a strong position with electric cars, although the Wolfsburg-based electric offensive is only slowly picking up speed.

Under no circumstances does VW want to reduce the pace in the country or even partially withdraw, as demanded by some politicians.

It is very important "that we remain present there and continue to be successful," emphasizes Brandstätter.

A special focus was recently on the Taiwan conflict.

China regards the republic off its coast as part of its own territory.

After Russia's attack on Ukraine, fears of an escalation are growing.

"Should there be a military conflict over Taiwan, the consequences would be serious for all of us," emphasizes VW manager Brandstätter.

He insists on diplomatic solutions, which he believes have a good chance of success.

"I have the impression that everyone involved is interested in de-escalation, not escalation."

"No evidence of human rights violations"

VW is also under pressure in the Xinjiang region.

The Wolfsburg-based company runs a plant there and is thus open to accusations of indirectly supporting the oppression of the Uyghur minority in the region.

Brandstätter, who has been in office for a good five months, has announced that he will visit the plant in February.

He defends the company's presence in Xinjiang.

"We are doing everything in our power to ensure good working conditions in Urumqi at the plant of our joint venture SAIC Volkswagen," said the China Board of Management.

“We also carefully examine our supplier network.

We have no evidence of human rights violations or forced labor.”

In order to protect the business against ever new disruptions in the supply chains, he promotes local value creation in the country.

"We will develop even more in China for China and involve local suppliers even more closely than before," announces Brandstätter.

"In this way we will accelerate the pace of development and serve the needs of customers even better." At the same time, the business will become less sensitive to geopolitical conflicts.

Many global corporations are currently pursuing such strategies, fearing that entire national companies would be cut off from supply chains and financial flows in the event of political escalations.

For the VW Group, which is particularly dependent on the Chinese market, this means that the national administration in Beijing is also gaining in importance.

In the future, she will work even harder on strategies and development instead of just organizing sales.

"Beijing will become a kind of second global headquarters for the VW Group," says Brandstätter.

Most recently, business was slowed down for years by harsh corona lockdowns.

The sudden end of China's zero-Covid strategy is now causing new problems.

Waves of infection are rolling through the country, overloading hospitals and also restricting the economy because many employees are absent.

Brandstätter expects the situation to start to ease in the spring.

“The first quarter will still be heavily influenced by the corona turbulence.

After that, the situation will gradually improve.”

He does not want to give a specific forecast for sales in China because of the continued great uncertainty.

Last year, the group delivered around 3.2 million vehicles to customers in the country, a decrease of 3.6 percent.

The number of e-models sold is growing strongly, albeit at a comparatively low level.

VW delivered 155,700 units in

, 68 percent more than in 2021.