Can German cars disentangle from Chinese dragon?

Germany is the leader of the pack in EU. German cars are seen in growing number in the streets of China. The tight dragon embrace has entangled Germany and German cars to such an extent that it has turned out to be their biggest geoeconomics vulnerability.

While the entire world is ravaged by the pandemic in 2020, China was the only country to register positive economic growth figure of 2.3% and expanded her GDP. The underpinning of the positive growth in 2020 leads to build up of growth projection as forecast by International Monetary Fund to 8.2%, in 2021.

Against this scenario it can be visualized that export of German cars to China together with the German cars manufactured in China under licence to experience exponential growth. Already one in three cars manufactured in Germany are sold in China, amounting to 38% of the production. Moreover the big three German car manufactures namely, Volkswagen, BMW and Daimler have joint ventures with Chinese conglomerates SAIC, BBA and BAIC respectively. 

Let me give you the sale figures of German cars in China for the year 2020 

VW 2,851,100

Audi 727,358

BMW 777,379

Mercedes 774,382

Porsche 88,968

This being the pandemic year, one can imagine what could be the real quantum in normal circumstance. Of course, VW is the lead manufacturer with 40% of her production being rolled out into China. The heart of the matter is Car sale to China is the mainstay of the industrial export of Germany.

Unsurprisingly, this fact alone ties the hands of Germany and gives little elbow room for her to openly take up the cause of human rights violations at the macro level. Additionally, in the micro level it is evident that Car manufactures in Germany would pressurise the German government to be sober towards the totalitarian line adopted by China domestically.

The biggest geoeconomics vulnerability, however, does not lie in the trade itself but in the mammoth investments made by German manufacturers, particularly the automobile industry in China. Admittedly, the investment figure of Euro 140 Billion spanned out in China by the Germans confirms that disentanglement from Chinese dragon is a non-starter!

 

Cheers! 

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.comis

Blog:   Business Strategist