VW to Sharply Boost China Procurement

Volkswagen AG will sharply boost its China procurement from last year's $10 million to $1 billion this year, according to the official website of the Ministry of Commerce of China. The German automaker explained that the prices of China-made automotive parts and components are cheaper than those by developed countries, due to China's overwhelming advantage in labor cost, roughly one fifth of the developed countries. The expanded procurement will incorporate not only products with low technical contents, but also some high-tech products produced by those Sino-foreign ventures in China, according to a spokesperson at Volkswagen's China operation.

From Asiaport Daily News

BEIJING — Volkswagen AG will sharply boost its China procurement from last year’s $10 million to $1 billion this year, according to the official website of the Ministry of Commerce of China.

The German automaker explained that the prices of China-made automotive parts and components are cheaper than those by developed countries, due to China’s overwhelming advantage in labor cost, roughly one fifth of the developed countries. The expanded procurement will incorporate not only products with low technical contents, but also some high-tech products produced by those Sino-foreign ventures in China, according to a spokesperson at Volkswagen’s China operation. The procurement program has already started, and will last to the end of this year, continued the spokesperson.

It is reported that Volkswagen has negotiated the prospect of Germany’s automotive parts and components manufacturing industry with its trade union, in the hopes of closing down or selling some plants.

The automaker will also strive to persuade the trade union into allowing longer working hours or taking other necessary actions to improve productivity. As a result, Volkswagen will shift the procurement of a proportion of parts and components to China.

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