SHANGHAI, Sept 12 (Askume) – China’s commerce ministry warned Chinese automakers at a recent meeting about the risks of making auto-related investments overseas as they seek global expansion to tackle sluggish growth in the domestic market, two people familiar with the matter said.
In a meeting in early July, the ministry had asked local carmakers not to invest in India, citing the central government’s “firm” directive not to invest in Russia and Turkey and highlighting the risks of setting up there, a source said.
The government is encouraging automakers to use overseas factories for final vehicle assembly using loose parts exported from China to mitigate potential risks posed by geopolitical issues, sources said.
But as Bloomberg News first reported on Thursday, the two said they had received no advice on how to ensure the crucial electric vehicle technology would be developed in the country.
He declined to be named as he was not authorised to speak to the media.
The Commerce Department did not immediately respond to a faxed request for comment.
India-China relations have been strained since the two countries’ armies clashed along the disputed Himalayan border in 2020, forcing New Delhi to step up scrutiny of Chinese investment and halt key projects.
China’s state-owned Shanghai Automotive Group Co Ltd (600104.SS) has been struggling to invest in India for years. In April this year, the company said it would court Indian investors to create a more favourable operating environment for its MG brand in the country .
The presence of Chinese brand cars increased after Western car manufacturers withdrew due to Russian sanctions.
Russian state news agency TASS quoted Vladimir Shmakov, director of Chery’s Russia unit, as saying that Chery (CHERY.UL) is in talks with Russian manufacturers about producing cars at Russian factories .
Chinese automakers are increasingly looking to expand overseas as they grapple with overcapacity amid weak demand in China, which has led to a prolonged and brutal price war. Their efforts to boost sales in key auto markets such as Europe and the United States have also been hit by rising tariffs on electric vehicles.
As many European countries, including Spain and Italy, seek to attract investment from Chinese automakers, companies are wary of independently producing cars locally, which requires significant investment and a deep understanding of local laws and culture.
Geely Automobile Co (GEELY.UL), China’s second-largest automaker by sales, is looking for factory sites in Europe but has not yet fully committed to expanding local production, I told Askume in Frankfurt this week.
Other companies such asZero Sports Car (9863.HK) also chooses to cooperate with local companies. Zero Roadster‘s joint venture with Stellantis (STLAM.MI) this yearProduction of electric vehicles has begun at the French-Italian carmaker’s Polish factory .
