China warns against foreign car factories

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China’s Ministry of Commerce warned Chinese automakers about the risks of investing in the auto industry abroad at a recent meeting, two sources told Reuters.

At a meeting in early July, the ministry ordered local automakers not to invest in India. Citing a central government directive, the source said, it “strongly discouraged” investment in Russia and Turkey. It also cautioned, in a milder tone, the risks of building factories in Europe and Thailand.

It also encouraged automakers to assemble cars in overseas factories using KD kits exported from China to mitigate potential risks posed by geopolitical issues, the source said.

According to Bloomberg News, no guidance was given on Thursday on how the country’s key electric vehicle technology would remain, the two sources told Reuters.

The ministry did not immediately respond to a Reuters request for comment.

While several European countries, including Spain and Italy, are trying to attract investment from Chinese automakers, companies remain reluctant to set up local production there independently, as this requires large investments and in-depth knowledge of local laws and culture, Reuters reported.

Geely, China’s second-largest automaker by sales, is looking for locations for a factory in Europe but has not yet fully committed to expanding local production, executives told Reuters in Frankfurt this week.

Leapmotor’s joint venture with Stellantis started producing electric vehicles at the automaker’s Polish factory this year, the report said.

“China warns over overseas auto factories” was originally created and published by Just Cara brand of GlobalData.


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