Foreign Carmakers Struggle to Make Profits in China Amid Environmental and Labor Concerns

German carmaker Volkswagen's Shanghai joint venture, Shanghai Volkswagen Automotive, has been named the most influential foreign-invested business in China in the second annual survey by mainland publishing group Southern Weekend. The company's success is a rare exception, as many foreign carmakers have struggled to turn a profit in the country despite investing billions of dollars in joint ventures and production facilities. Environmental and labor concerns are some of the key issues that have affected foreign companies in China, with 17% of the 126 firms surveyed identified as serious polluters and 45.2% not allowing trade unions to organize at their operations.

Key Takeaways:

• Shanghai Volkswagen Automotive was ranked as the most influential foreign-invested business in China, with a score of 64.36 out of 100.
• The survey evaluated 126 of the largest Fortune 500 companies operating in China, with criteria including financial indicators, investment, environmental protection standards, and brand recognition.
• 17% of the surveyed companies were identified as serious polluters by the mainland government.
• 31.7% of the companies received serious complaints about their products.
• 45.2% of the companies do not allow trade unions to organize at their operations in China.
• Many foreign companies object to Chinese trade union laws, which do not allow independent trade unions.
• Foreign carmakers have invested billions of dollars in China, but many have struggled to turn a profit.
• The survey used a quarter of each company's total potential score to evaluate their "social responsibility", defined as attention to working conditions, quality of products, after-sales service, and environmental protection.

Statistics:

• 126 companies were surveyed in the Southern Weekend study.
• 17% of the companies surveyed were identified as serious polluters by the mainland government.
• 31.7% of the surveyed companies received serious complaints about their products.
• 45.2% of the companies do not allow trade unions to organize at their operations in China.
• Shanghai Volkswagen Automotive scored 64.36 out of 100 in the survey.
• Motorola China Electronics scored 63.12 out of 100.
• Shanghai General Motors scored 55.49 out of 100.

Sources:

• Southern Weekend