MK sports East China's Fujian Province, ready to be sent to Europe, on July 10, 2024 Photo: CFP" src="https://www.globaltimes.cn/Portals/0/attachment/2024/2024-07-22/a26b3661-e7b5-4d3d-b4e3-1eebc9b801bd.jpeg" />

Cars made by Chinese companies park at Xiamen port, East China's Fujian Province, ready to be sent to Europe, on July 10, 2024 Photo: CFP

Even as the European Union (EU) has recently introduced provisional additional tariffs of up to 37.6 percent on Chinese electric vehicles (EVs), some EU member states are competing for Chinese EV manufacturing investment and jobs.

France would welcome 'Chinese electric vehicle giant BYD if the company decided to open a factory in France, French Finance Minister Bruno Le Maire said in May, Reuters reported.

As the second largest carmaking country in Europe after Germany, Spain has secured investment from Chinese company Chery, which will start production in the fourth quarter at a former Nissan facility in Barcelona with a local partner, Reuters reported.

Italy can tap its national automotive fund, worth 6 billion euros ($6.5 billion) between 2025 and 2030, for incentives for both car buyers and manufacturers. China's Dongfeng is among several other automakers to have held investment discussions with Rome, according to the media reports.

It is interesting to note that these EU members are among those backing tariffs in an "advisory" vote regarding the additional tariffs on imports of China-built EVs on July 15, leading experts to believe that the imposition of tariffs could be about prompting Chinese companies to set up factories in Europe, help the growth of Europe's own EV industry and increase employment opportunities.

While the shift of Chinese EV companies from exporting to manufacturing in Europe can avoid imminent impact of tariffs risks, the situation may not be as simple as it seems, Chinese experts said. 

They warned that the risk of Chinese EV companies setting up factories in the EU is multifaceted, including the political and policy risks, technology leakage, and unfair treatment. 

Risk increasing 

The increasing efforts to attract Chinese investment by some EU members, coupled with their resistance to Chinese EVs entering the European market, reflects the complexity and contradictions, Zhao Junjie, a research fellow at the Chinese Academy of Social Sciences' Institute of European Studies, told the Global Times on Tuesday.

"Although the EU relies on China's new-energy industry for economic restructuring and benefits, its politicization of trade issue may lead to unstable political factors," Zhao said.

It is important to point out that EU's anti-subsidy investigation was not initiated by Europe's automotive industry, but rather by the European Commission (EC), which leads to concerns linked to unstable political factors and risks regarding China's EV investment in the block, experts said.

Since the beginning of this year, the EU has imposed 31 restrictive trade and investment measures against China, 25 of which were trade remedies, seriously undermining China-EU economic and trade cooperation, according to Ministry of Commerce (MOFCOM). 

There are also concerns that the EU wants to leverage the Chinese EV industry to boost its own development, only to potentially abandon or "dump" the Chinese industry when they will have achieved their goals, experts said.

There is reason to believe that the main purpose of EU imposing tariffs on Chinese EVs is to compel Chinese EV companies to establish plants in the EU, transfer technology and industry chains to Europe, improve the local industry chain, Zhang Jian, vice president of the China Institutes of Contemporary International Relations, told the Global Times on Tuesday.

However, there are risks involved, such as the potential for technology leakage and unfair treatment of Chinese investment if the EU has mastered the skill. This uncertainty poses significant risks for Chinese companies looking to invest in EU, Zhang said.

Some Chinese EV companies have already expressed their concerns of the potential technology leakage, citing the overly collected information by the EU during their investigation. 

On Monday, China's SAIC Motor Corp said that the EC anti-subsidy investigation of Chinese EVs involves commercially sensitive information, such as the request for cooperation in providing chemical formulas related to batteries, which is beyond the normal scope of the investigation.

SAIC said it has submitted thousands of pages of written material during the investigation, but the EC has ignored key information and defense arguments submitted, inflating the subsidy rates of multiple projects. 

SAIC said it submitted its defense against the anti-subsidy preliminary ruling, during a hearing on Friday.

MOFCOM also said at a press conference on June 20 that the EC has requested a large amount of core information from Chinese companies in the anti-subsidy investigation. The types, scope, and quantity of information requested are unprecedented and far exceed what is necessary for the anti-subsidy investigation.

Call for fair competition 

While actively addressing tariff issues in the EU market, Chinese EV companies are increasing their efforts to expand into other markets. 

On Sunday, ZEEKR announced the launch of two of its star models in Mexico as the Chinese brand is accelerating its global layout and is expected to enter 50 countries and regions worldwide by the end of this year. 

On July 17, NETA Auto opened a sales center in the country, marking its entry into the West Asian market. Also on the same day, GAC Aion had its intelligent factory in Thailand put into operation.

Chinese companies should proceed with caution when expanding into Europe, as it may pose challenges. However, this should not deter them from pursuing global expansion. 

Experts urged the EU to offer guarantees to ensure fair competition for all companies involved.

"The trend of Chinese EV companies expanding into Europe is unstoppable and mutually beneficial for both regions' economic growth. 

However fair competition is essential for ensuring that investments from Chinese companies benefit both sides and the China-Europe relations," Zhang said.

As more Chinese companies have invested in Europe, it is crucial for them to carefully consider factors such as government policies, profitability, and protect their technology secrets, Zhang said.

European automotive companies such as Volkswagen also advocate for fair competition and strongly oppose the EU's imposition of tariffs on Chinese EVs.

Despite the potential influence of politicians on the market, it is important to remember that the market should be open to new ideas and innovations, Zhao said.