Next plant planned

Chinese car supplier opens plant in Hungary

The government in Budapest is currently advertising its own economic policy: "Hungary can do it."(Bild: APA/AFP/Attila KISBENEDEK)

Even though the EU has introduced protectionist measures against China in order to protect its own automotive industry through cheap e-car imports, the Middle Kingdom is apparently finding enough loopholes to gain a foothold in Europe. This is happening with the active support of Hungary, where a producer of important basic components for electric motors is now building a plant.

Specifically, it is the Xinzhi Group, which, according to Hungary's Foreign Minister Péter Szijjártó, will create almost 900 new jobs - not only in production, but also in research and development - with an investment of around 121 million euros. The plant will reportedly be built in the northern Hungarian town of Hatvan. It remains to be seen whether the 900 workers will be Hungarian or Chinese guest workers.

Will Hungarian or European workers be employed at the planned plant, or will most of them be Chinese? The government in Budapest has not said a word about this.(Bild: APA/AFP/STR)

"Hungary at the forefront of the switch to e-cars"
The new company in Hatvan should be able to produce one million stator and rotor parts for electric motors every year. Hungary is at the forefront of the transition to electric cars, as it is considered a stronghold and a pioneer in the global renewal of the automotive industry, said Szijjártó.

Agreement also with Volkswagen
However, the Hungarian chief diplomat emphasized that the investment was not only "good news for Hungary", but would also help to reverse the "economic decline of the EU". In fact, the European automotive industry would also benefit from the Chinese subsidiary - especially in the area of research and development. In the summer of last year, Xinzhi announced that an agreement had already been reached with Volkswagen for the supply of stator and rotor parts. This was the first major order from a car manufacturer outside of China.

Criticism of China's involvement in Hungary
China is very active in Hungary. Electric car manufacturer BYD is building a large plant in Szeged in southern Hungary, while battery cell producer Catl is building a mega-factory in Debrecen in eastern Hungary. Chinese companies are building the new railroad line from Budapest to the Serbian capital Belgrade. Hungary took out a loan of almost 900 million euros from the Chinese Exim Bank for the construction of the Hungarian section.

However, there are also warning voices in Hungary who point out that Chinese companies often largely protect their value chains, leaving little of the cake in the host countries. According to the media, the leadership in Beijing is investing primarily to avoid the EU's punitive tariffs because the cars are built in the European Union and not imported. A headline in the Hungarian business portal "G7" was also apt in this context: "More and more Chinese suppliers are building in Hungary, but is that good for us?"