Volkswagen Withdraws from Russia... CEO Heads to China

Blume to Accompany Chancellor Scholz on China Visit in Early Next Month

Oliver Blume CEO (Photo by Reuters)

[Asia Economy Reporter Jo Yujin] Bloomberg reported on the 22nd (local time) that Volkswagen, which halted production in Russia due to sanctions from the Ukraine war, is considering expanding its business in China.

According to the report, Oliver Blume, CEO of Volkswagen, is scheduled to visit China in early next month. A source familiar with the matter stated that CEO Blume will accompany German Chancellor Olaf Scholz as part of the economic delegation during Scholz's visit to China on the 4th of next month.

The two-day, one-night visit is seen as part of efforts to maintain market share in China, the world's largest automobile market, the news agency said.

European automakers, including Volkswagen, have been considering business strategies such as expanding production bases in China as an alternative after suffering significant damage due to prolonged sanctions following Russia's invasion of Ukraine in February.

However, as military threats from China against Taiwan escalate and US-China tensions deepen, concerns have arisen that sanctions against Russia due to a second Ukraine war could be similarly replicated in China.

China is Volkswagen's single largest market, accounting for 40% of total sales. Since last year, sales in the Chinese market have declined due to the vehicle semiconductor supply shortage spreading across the automotive industry and complaints about digital function errors in various car models, putting pressure on performance improvement.

Volkswagen has long invested effort in the Chinese market. Currently, it operates local factories through joint investments with Chinese partners, and earlier this month, it decided to invest 2.4 billion euros to establish a joint venture related to autonomous driving with Horizon Robotics, a Chinese autonomous driving semiconductor company.

During this visit, Chancellor Scholz is expected to meet with President Xi Jinping, who secured a third term on the 23rd. Bloomberg interpreted Scholz's visit as an attempt to find a balance between the economic interests of his country's companies and discussions on human rights abuses in the Xinjiang region.

After taking office at the end of last year, Chancellor Scholz declared a break from the pro-China line and pledged to reduce economic dependence on China. As one concrete measure, the German Ministry of Economy rejected Volkswagen's request for an extension guarantee for investment in China in May.

This content was produced with the assistance of AI translation services.