Chinese automotive parts companies have quietly increased their control over parts of Europe’s car supply chain, acquiring local suppliers as Beijing seeks to expand its industrial presence in Europe amid growing resistance to Chinese vehicle exports.
Since the mid-2000s, Chinese companies have invested in more than 130 European automotive parts makers, mainly in Germany and France, according to consultancy Rhodium. The acquisitions have raised concerns among European policymakers and automotive executives, who fear that China’s rapid expansion in vehicle exports could eventually reshape the continent’s market for car components.
“It will not be surprising if in the near future, two or three of the top 10 suppliers are Chinese, which is not the case yet,” said Sébastien Frendo, chief executive of Paris-based consultancy Do Well Do Good.
The expansion began in part under Beijing’s “go global” strategy, which encouraged Chinese companies to internationalise their operations and acquire foreign technology through overseas investment. Chinese automotive investment in Europe peaked in the mid-2010s, including Geely’s $1.8bn acquisition of Swedish carmaker Volvo Cars.
More recent transactions have generally been smaller. Beijing’s restrictions on outbound investment, combined with rising trade barriers, meant many deals over the past decade were worth less than €100mn, keeping them below thresholds that could trigger intervention by European regulators.
The strategy has become more significant as Europe has sought to limit China’s growing advantage in electric vehicles. In 2024, the EU imposed additional duties on Chinese EV manufacturers including BYD, on top of its existing 10 per cent tariff on car imports, following an investigation into the impact of state subsidies.
Farley Mesko, chief executive of corporate intelligence firm Sayari, said the extent of Chinese ownership could be greater than publicly recognised. Of the Chinese-controlled automotive assets Sayari has mapped in Germany, “roughly four in five are held through at least one offshore intermediary or involve a German-registered holding company carrying a local name”.
One EU official described China’s challenge to Europe’s car sector as “the challenge of the decade for Europe”. Chinese companies have pursued several routes into the European market, including increasing exports, taking stakes in local companies, forming joint ventures and building factories in the EU and nearby countries such as Serbia, Turkey and Morocco.
The deals have often remained below the political radar, but Armand Meyer, a senior research analyst at Rhodium, said European policymakers remained concerned about the continuation of small-value acquisitions.
Brussels’ plans to impose stricter local-content rules requiring European-made car parts and labour have added another incentive for Chinese companies to acquire local suppliers. A senior executive at a leading Japanese car parts supplier said buying European companies offered Chinese suppliers an effective way to rapidly obtain production bases and secure “made in EU” status without building facilities from scratch.
Only a small number of Chinese suppliers, including battery maker CATL and Yanfeng, which is part of MG owner SAIC, are currently large enough to compete globally at the highest level. But financial difficulties among European parts manufacturers have created opportunities for other Chinese companies.
Sayari’s analysis of 62 Chinese-owned entities in Germany’s automotive supply chain found clusters of ownership in major carmaking hubs. The acquisitions include high-technology manufacturers producing gaskets for high-end engines, self-driving systems and wireless connectivity antennas.
The stakes are significant because Europe’s automotive parts industry directly employs about 1.7mn people. According to European trade body Clepa, major suppliers including Bosch, Valeo and Forvia have already cut more than 100,000 jobs over the past two years.
European carmakers are also monitoring Chinese acquisitions because changes in ownership could create supply-chain risks, particularly when an acquired company is the sole supplier of a critical component. Benjamin Bulander, a partner at Porsche Consulting, said manufacturers were scrutinising such transactions closely.
Sayari identified acquisitions by 23 Chinese groups in Germany. One European industry executive said car companies now maintain lists of Chinese-owned parts makers in Europe so they can identify alternative suppliers.
Yet the expansion has not produced uniformly successful results. Some Chinese suppliers continue to operate on thin margins, while transferring engineering talent and service capabilities overseas has proved difficult. “We do see some suppliers expanding overseas, but genuinely successful cases are still very rare,” said Chris Liu, a Shanghai-based EV analyst with Omdia.
Yanfeng illustrates the longer path some Chinese suppliers have taken. The company formed a joint venture with Ford in China in 1994 and subsequently expanded through relationships with Volkswagen and General Motors. It later established production in the United States, where it also supplied Tesla.
Its international expansion accelerated after it formed a $7.5bn automotive interiors joint venture with US group Johnson Controls, which Yanfeng now owns. As western carmakers’ sales in China weakened, Yanfeng won orders from BYD and emerging Chinese manufacturers and became increasingly positioned to support Chinese carmakers expanding into Europe.
Other Chinese companies have gained entry more recently through European partnerships. When electronics group Luxshare agreed last year to buy Germany’s Leoni for €525mn, the transaction received “active support” from the struggling German cable group’s European clients.
Leoni chief executive Klaus Rinnerberger said European carmakers wanted to learn from China’s rapid development cycle. For Luxshare, he said, Leoni provided an opportunity “to establish a foothold with European original equipment manufacturers”.
The growing Chinese presence has therefore produced a complicated response in Europe, combining concern over ownership and strategic dependence with recognition of Chinese technological and cost advantages. Bosch Mobility board member Christoph Hartung said collaboration could provide a route for Chinese suppliers to expand internationally while remaining integrated with established European partners.
For Rinnerberger, the underlying competitive pressure is clear. European suppliers that fail to adapt to the speed of companies such as BYD and Geely risk falling behind.
“What I firmly believe is that many [European] suppliers will increasingly run into difficulties, because if you are not willing to work with the Chinese instead of against them, you will not be able to keep up with the pace of change that is coming,” he said.
