Going Global | If you can't beat them, join them? The EU recognizes China's leadership and seeks reverse joint ventures?

Introduction: "Going to sea | European Union finally failed to evolve. As the European Union follows the pace of the United States and increases tariffs on Chinese trams, China's new energy automobile industry has been actively seeking solutions in recent days. However, the recent reports from foreign media POLITICO have brought a glimmer of light to car companies in the" chaos ", which is also an

idea advocated by the author recently.

Source: The Internet

1. Plot review

The plot is still rather ups and downs.

Between the Beijing Auto Show, the relationship between Chinese and European car companies is relatively "hot"; for example: in "Going to sea | Can Li Shufu and Luca de Meo's embrace ease the European Union's anti-subsidy investigation against Chinese Trams", "Going to sea | Reconciling trade frictions between China and Europe".

Afterward, Stellantis, the Italian automotive group, also launched a global cooperation with Zero Car; for example: "Official announcement! Stellantis invests in Zero Car 1.50 billion and obtains a 20% stake". In the cooperation, Stellantis will be responsible for selling Zero Car cost-effective cars in the global market (mainly Europe).

However, in recent days, the European Union's tariffs on Chinese trams have undergone new changes; it has also made the previous "hot" sentiment between China and Europe quickly drop to freezing point. The author once judged that the European Union should not follow the steps of the United States to increase tariffs, because, after all, tram exports account for less than 3% of Sino-US trade. For example: "Going to sea | When will the new tariffs on European Union trams be implemented? What do European Union countries think about countervailing?"

In recent days, according to the communication between the author and the automobile industry practitioners (Chinese and foreign), the focus is more on the interpretation of the new European Union policy towards China and how to find corresponding solutions to better avoid the negative effects of the new tariffs.

Refer to the WeChat communication between the author and French automotive industry experts:

Source: The author

"[I] don't have a solution, more an explanation about the process and avenues to explore to avoid tax hikes. The chips are not affected, so it is possible to export KD and achieve local assembly. But I'm not sure if there is a minimum local content percentage and if this is seen purely as a component."

"Carmakers have three working days to submit their comments for adoption by July 5, which is July 4. During this time, the European Union Commission and Chinese authorities may reach another agreement."

2. The European Union acknowledges the leadership of China's trams

For decades, Europe has believed that technological superiority always guarantees a step ahead of China; although reality has proved this belief wrong; to the face of the European Union.

Chinese companies have caught up with European companies, starting to overtake them in everything from solar panels to consumer drones and now electric vehicles, according to foreign media reports.

According to a study by the German Chamber of Commerce in China, 69% of German automotive companies believe that their Chinese competitors are already ahead of them in terms of innovation, or will be ahead in the next five years.

Now, the world has changed.

When I was in Europe, there was a much-publicized "trolley espionage case by a Chinese company"; at that time, the case accused three Renault executives of transferring Renault electric vehicle technology to a Chinese company. As a result, the French company searched for a long time and found no so-called Chinese company; it was likely that this was an internal political struggle.

Source: The Internet

Now, instead of worrying that China will steal Europe's EV technology in a catch-up game, the fear is that Europe is falling behind. Realizing that its industry needs new investment and expertise to compete, the European Union is now seeking a negotiated solution with China.

3. Join if you can't beat it

Fears of a trade war have prompted Prime Minister Olaf Scholz to break with the convention and publicly question the European Union's investigation into electric vehicle subsidies.

However, it is still difficult for Germany to change the European Union's attitude towards Chinese trams. After all, the European Union's debt level, the European Union, is unable to implement large-scale industrial transformation like China's.

What can the European Union do?

Before the author read this foreign media, the communication with French friends proposed that the European Union can also take subsidy measures to encourage Sino-European joint ventures, and can also regulate China's transfer of some technologies during the joint venture process.

Isn't this the main strategy of China's joint venture back then, the "technology market"? Although China has not succeeded on this road (of course, it is also "due" to the protection of technology by European companies, because the previous generation of technology was put into the Chinese market), this does not mean that this road will not work.

Source: The author; a friend of the author mentioned that "Chinese companies will still come to Europe, just to rethink profit margins"

According to POLITICO (June 18), the European Union is overhauling its "trade war" with China.

In the past few years, the European Union's trade policy has traditionally focused on building protective fortress walls, and last week's decision to impose punitive tariffs on Chinese electric vehicles looks like another example of a classic defensive playbook.

Surprisingly, however, the European Union is now considering its next move, inviting Chinese EV makers inside the walls.

The grand idea, based on conversations with four diplomats and two senior officials, is to use the threat of tariffs to force Chinese automakers to come to Europe to set up joint ventures and share technology with their European Union counterparts.

In addition to Stellantis and Zero Run, Spain's EBRO-EV has partnered with China's fifth-largest car company, Chery, to develop electric vehicles in Barcelona.

For years, the European Union has been at the forefront of Western investors' protests against Chinese demands that foreign investors in China set up joint ventures and share know-how: forced technology transfers that the European Union used to attack.

European industry insiders say carmakers are eager to strike such deals, which they believe make the most business sense for lagging industries.

Joint ventures make sense because they are a way to ensure that China is not just setting up final assembly plants in Europe, but a more substantial part of the supply chain. Of course, it can also be a way to ask China to share some technology

A European Union diplomat

In the face of intense pressure from Germany to avoid a trade war, the joint venture plan, which aims to defuse the fight while securing some victories for Europe, quickly gained support in Brussels.

It could also be the last chance for Europe to play a bigger role in the EV supply chain, where European companies, particularly German ones, have been leading players in traditional cars and where they want to be China's partners in battery-powered vehicles.

The European Union uses not only carrots, such as subsidies and trade deals but also sticks, such as tariffs, to encourage Chinese companies to invest in its land.

More notably, officials and diplomats are discussing the use of tools such as investment screening to "entice" Chinese companies into such joint ventures.

Hungary, which is now the country with the largest number of Chinese EV investments in Europe, also wants to push for such joint venture requirements during its upcoming presidency of the European Union Council, a fourth diplomat said, hinting at a possible deal to remove European Union tariffs on Chinese automakers that invest locally.

I have worked and lived in France before, and here is an ad for France. France is also very eager to attract Chinese batteries and automakers. Economy Minister Le Maire said last month: "BYD is welcome in France, and the Chinese auto industry is welcome in France." (Politician's words)

Source: The Internet

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