Chinese automotive firms are increasingly acquiring European suppliers, raising concerns about supply chain dominance. Since the mid-2000s, Chinese companies have invested in over 130 European parts makers, particularly in Germany and France, per Rhodium data. Geely’s $1.8bn purchase of Volvo Cars in 2016 marked a pivotal moment. EU policymakers warn of potential Chinese control over critical components, with some analysts predicting Chinese firms could dominate the top 10 suppliers. The EU has imposed additional tariffs on Chinese EV makers like BYD and is pushing local-content rules to counter this trend.

Chinese strategies include joint ventures, factory setups, and offshore intermediaries. Farley Mesko of Sayari notes that many Chinese-owned entities use German-registered holding companies to obscure their footprint. This has alarmed European executives, who fear supply-chain vulnerabilities if Chinese firms control key parts. Companies like Bosch and Valeo have shed 100,000+ jobs in two years, intensifying worries about local employment. Chinese suppliers such as CATL and Yanfeng (owned by SAIC) leverage their scale to compete, often acquiring financially strained European firms. Yanfeng, for instance, expanded via partnerships with Volkswagen and now supplies Chinese brands like BYD in Europe.

The EU’s local-content rules aim to force carmakers to use European parts and labor, incentivizing Chinese investments to gain ‘made in EU’ status. However, critics argue many Chinese suppliers operate on thin margins and struggle to export expertise. While some analysts see limited success, others note strategic moves by firms like Yanfeng, which built global ties through Western clients. The sector employs 1.7mn people in Europe, and policymakers advocate stricter controls to mitigate risks. Recent cases, like Sinochem’s stake in Pirelli, highlight geopolitical tensions, with potential bans looming in the US.