Abstract

"The Initial Stage of Chinese-German Negotiations to Build Volkswagen's Shanghai Factory "

Tao Chen, Tongji University (chris189900@gmail.com)

Volkswagen (VW)’s Santana Project in Shanghai was a flagship project of West German investment in the PRC during the latter’s early reform period. Based on the success of Joint Venture in the 1980s, VW has become deeply intertwined with China and the Chinese market. Yet in the early 1980s, due mainly to the low GDP per capita and poor industrial infrastructure in China, the main goal of the VW to establish a Joint Venture in Shanghai was to export cars to the booming Asian tiger countries. Although they had to find a way to confront sharp competition with Japanese automobile industry, investment in China was only a long-term strategy for VW in the 1980s. On the Chinese side, negotiations with VW to build a modern automobile factory reflected the efforts of communist leaders at the top such as Deng Xiaoping and Chen Yun to reform domestic automobile industry, as well as middle-ranking automobile experts represented by Rao Bin, Jiang Tao, and Qiu Ke. Notwithstanding rising critics in China against the project, Chinese reformer successfully reached a trial production protocol with VW representatives in 1982, which was the first step towards Joint Venture. Drawing on archival sources from governmental and company archives in China and Germany, this article will explore the bilateral negotiations between VW and Chinese government to build the first German joint venture in Shanghai. This article will shed light on the strategical plans of Chinese political and technological elites towards the Joint Venture, as well as internal disputes among them for the first time. Meanwhile, I will examine the calculations of VW board of directors during the negotiations with Chinese.