Volkswagen Group, which commands half of China's auto market, is likely to move its office for Asia-Pacific (AP) operations to Beijing from Wolfsburg, the group's German headquarters.
Sending a strong signal of the strategic move, Bernd Leissner, president of the Volkswagen Group Asia-Pacific region, moved his personal office to Beijing last weekend.
To concentrate on Asia-Pacific operations, Leissner is expected to spend at least six month a year in China.
Zhang Suixin, managing director and chief representative of the Volkswagen (China) Investment Company Ltd, said to China Daily that it is likely the entire Asia-Pacific office will be moved, because Volkswagen is attaching greater importance to China.
Volkswagen's Asia and Pacific division is responsible for operations in the Chinese mainland, Hong Kong, Taiwan, Japan, Australia, New Zealand and countries in Southeast Asia.
The German auto giant's two joint ventures in China -- Shanghai Volkswagen Automobile Co Ltd and FAW-Volkswagen Automobile Co Ltd -- will manufacture and sell 1-1.5 million cars annually by 2010, half of the anticipated total auto sales in China for that time, Zhang said.
China, which nearly all auto makers expect will grow into the world's largest auto market, is expected to be Volkswagen's major growth site.
Volkswagen apparently expects to benefit from China's market for its global strategy and Asia-Pacific operations. It held 12.5 percent of the global auto market last year, selling 5.08 million cars. But in the Asia-Pacific region, its market share stood at only 5.5 percent. There is room for growth in the region and thus the urgency for heightened efforts.
Volkswagen's two joint ventures in China, located in Shanghai and Changchun, have enjoyed at least 50 per cent of the growing market for 15 years. Last year, the two ventures sold a total of 340,000 cars, 54 percent of the nation's total sales of 700,000 units.
At a recent news briefing in Beijing, Zhang said it would be necessary to integrate the two ventures for economic efficiency.
The integration will start with engines and gear boxes, Zhang said. Manufacturing and development for the two ventures will be planned in one framework.
China is drafting an anti-trust law, but law makers said the new law would not be binding on foreign-funded auto makers as they are not large enough in economic scale by current international standards.
Volkswagen has decided to cooperate with Shanghai Automotive Industry Corp and other partners in Shanghai Volkswagen for another 20 years. Contracts for that were signed in Wolfsburg earlier in April, with President Jiang Zemin present.
Zhang described the new agreement as a milestone for Volkswagen, marking the enterprise's control over its planning and decision-making in investment and routine operation.
(China Daily April 24, 2002)
