When Chinese Premier Wen Jiabao will come to Germany on April 23, he will open the Hannover Fair and will visit old friends at nearby Volkswagen. Volkswagen will have a present for China’s outgoing leader: Volkswagen will build another factory in China. What is strange are the factory’s size and location.
The factory will be located in China’s proverbial middle of nowhere, in Urumqui near the western border to Kazakhstan. Urumqui is more known for ethnic clashes in the restive Xinjiang province than for its auto industry. What is also odd is the size of the VW plant. The present is the proverbial small present. The plant will be built for 20,000 to 50,000 units per year, says Automobilwoche [sub]. “Other VW factories in China produce more than 300,000 units per year,” says the magazine.
The small factory also will come relatively cheap. Xinjiang media talks about 2 billion yuan, or $317 million. Volkswagen will hardly notice that investment. The company said last year it plans to spend 14 billion euros ($18 billion) on new plants and products in China through its joint ventures. The joint venture involved with this factory is SAIC, says Automobilwoche.
Makes sense. The current situation where most of China’s industry is all crammed over on their east coast and the inland areas are third-world-rural is not great for national stability long-term.
Agreed. This may look like a great move someday.
Maybe, but why such a small plant, then?
This seems like something driven by politics, not business, and may bode ill for the industry.
D
If I understand correctly, there has been a lot of unrest in Urumqui. It is likely that the real hope is that improved economic development will give the residents something to do besides foment rebellion. I would guess that Chinese leadership put some pressure on VW for this.
I heard this is really an Iranian funded uranium mine disguised as a German car factory because we all know any Volkswagen manufactured in China (or Mexico for that matter) is destined to be a ‘bomb’.
Urumqi is hardly the middle of nowhere anymore (it has almost 3 million people), especially after the Chinese government has dumped loads of investment capital there and building it as a major economic/trading hub for Central Asia. (And the whole aspect of providing the bread in their “bread and circuses” to pipe down dissent there amongst the local Muslims)
Going to the bazaars there (and the ones near the Kazakh border) is like going to another planet – love the food there! Guinness lists it as the most remote city from any sea in the world – 1600 miles from the nearest coastline.
This is nothing short of VW’s Area 51.
They will clearly be flying automotive SR-71s back and forth between here and the DMZ over at Ehra-Lessien for testing+dev.
Watch for the UFO reports…