VW to ex­port $9bn cars, parts to China

Gulf Times Business - - BUSINESS -

Ger­man car maker Volk­swa­gen AG signed what looked like a meaty deal with one of its China joint ven­tures this week at a huge new trade show in Shang­hai to ship al­most $9bn worth of cars and parts to China next year.

But it turns out the “Me­moran­dum of Co-op­er­a­tion”, one of hun­dreds of deals inked at the China In­ter­na­tional Im­port Expo that wraps up to­day, rep­re­sents busi­ness as usual for VW.

Two sources close to the com­pany and its FAW-Volk­swa­gen tie-up said the joint venture would have im­ported the cars and parts with or with­out the expo to sup­port its day-to-day man­u­fac­tur­ing and sales op­er­a­tions, as it does every year. FAW-Volk­swa­gen did not have an im­me­di­ate comment.

While the gi­ant im­port fair is a key part of China’s re­sponse to grow­ing com­plaints about its com­mer­cial poli­cies, crit­ics said the tightly chore­ographed event was more show than sub­stance that failed to ad­dress core is­sues at the heart of the fes­ter­ing USChina trade war.

“I don’t think we’re hold­ing out high hopes for the expo in terms of im­prov­ing China’s trade re­la­tion­ship with the rest of the world,” said Dun­can In­nesKer, re­gional di­rec­tor for Asia at the Econ­o­mist In­tel­li­gence Unit.

“Peo­ple re­ally want to see a gen­er­alised im­prove­ment in the fair­ness of the op­er­at­ing en­vi­ron­ment, not a spe­cific com­mit­ment to im­port­ing more in this par­tic­u­lar year or what­ever.”

State me­dia has lav­ished praise on the event, which was head­lined by Pres­i­dent Xi Jin­ping, who pro­vided few specifics in his open­ing speech about how China would ad­dress com­plaints on is­sues like mar­ket ac­cess and in­tel­lec­tual prop­erty rights pro­tec­tion.

“The Shang­hai expo will act as a demon­stra­tion be­fore bil­lions of global ob­servers that China is let­ting the mar- ket play the de­ci­sive role in its busi­ness op­er­a­tions,” the Global Times news­pa­per said.

The expo’s or­gan­is­ers were less lais­sez faire, and the heavy hand of the state, from sti­fling se­cu­rity to pressure on state-owned en­ter­prises to do deals, was ever-present.

Schools were closed across Shang­hai, a city of more than 24mn peo­ple, on the first two days of the expo and cars with­out spe­cial passes were blocked from ap­proach­ing the enor­mous clover­shaped ex­hi­bi­tion hall.

In­side, guards and po­lice blan­keted the venue and lined walk­ways to and from the sub­way. Par­tic­i­pants were re­quired to un­dergo air­port-level se­cu­rity and a long list of items, from dag­gers to Fris­bees, were banned.

“I’m not sure what they are try­ing to pro­tect with all of this se­cu­rity,” one for­eign in­dus­try VIP said.

Hun­dreds of stu­dent vol­un­teers in red blaz­ers of­fered di­rec­tions around the venue, which boasts an ex­hibi- tion area roughly the size of 40 foot­ball pitches and a multi-storey maze of roads, meet­ing rooms, of­fices and restau­rants.

One Reuters jour­nal­ist clocked more than 17,000 steps of walk­ing at the expo in one day, or roughly 12km.

Many of the deals touted at the fair, like Volk­swa­gen’s, ap­peared to be ei­ther busi­ness agree­ments that would not or­di­nar­ily war­rant pub­lic­ity, or the an­nounce­ment of pre­vi­ously agreed con­tracts, ac­cord­ing to ex­ec­u­tives. Af­ter one sign­ing, a for­eign par­tic­i­pant told Reuters that he had noth­ing to do with the com­pany he was rep­re­sent­ing.

“Ev­ery­thing you saw at the sign­ing cer­e­mony was the­atre or farce.

I’m es­sen­tially an ac­tor, hired for the du­ra­tion of the expo, in or­der to give the im­pres­sion of in­ter­na­tional co-op­er­a­tion,” the per­son said, ask­ing not to be named.

Chi­nese com­pa­nies have been known to hire for­eign­ers to im­per­son­ate ex­ec­u­tives at events, pre­sum­ably to lend an air of in­ter­na­tional le­git­i­macy.

On Wed­nes­day at the expo, China’s state-run off­shore oil and gas com­pany CNOOC Ltd signed 20 deals with for­eign busi­nesses, in­clud­ing Siemens, Cater­pil­lar and Sch­lum­berger.

Two peo­ple in­volved in the sign­ings said the deals were non-bind­ing “mem­o­randa of un­der­stand­ing”, or let­ters of in­tent, with ex­ist­ing part­ners.

CNOOC ex­ec­u­tives de­clined to pro­vide de­tails.

Merck Group’s CEO for per­for­mance ma­te­ri­als, Kai Beck­mann, said deals aren’t ev­ery­thing.

“For us as a global com­pany, any sig­nal that pro­motes free trade and global col­lab­o­ra­tion is highly ap­pre­ci­ated and wel­come, and this plat­form was used for that pur­pose,” he said.

“In the old days, th­ese kinds of exhibitions and trade fairs were used to sign deals.

But now you do the deals through e-com­merce and you don’t need trade fairs for that.”

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