The Chinese Premier and German Chancellor visited a Volkswagen factory in Wolfsburg Monday where it was announced that the German automobile manufacturer would build a new plant in western China's Urumqi.
During an event in Wolfsburg at a Volkswagen plant, Chinese Premier Wen Jiabao and the German Chancellor Angela Merkel, alongside Prof. Dr. Martin Winterkorn, CEO of Volkswagen Aktiengesellschaft, and representatives of the Chinese partner SAIC Motor Corporation, helped welcome a major announcement between the nations, according to a press release.
The Volkswagen Group and China First Automobile Group Corp (FAW) agreed to extend the joint venture by a further 25 years. Volkswagen and Chinese partner SAIC Motor Corporation signed a contract that would build a brand new plant in Urumqi, the capital of the province Xinjiang.
Volkswagen, the world’s second largest automaker, will invest approximately $225 million in the new plant that will make 50,000 vehicles annually as of 2015. Winterkorn called the agreement a “30-year success story” between Volkswagen and China.
“As a pioneer of the Chinese automotive industry we gave important momentum to China’s industrial development and to German-Sino economic relations,” stated Winterkorn. “Together with our partners we will now carry this pioneering spirit into Western China as well.”
It is expected that the joint ventures will employ approximately 50,000 people and produce not only cars, but also engines at ten plants, gearboxes and chassis. The German carmaker also said that it will help suppliers to establish operations in the vicinity and create a training center.
“We expect strong growth in China's rural regions. The west of the country plays a special role in this context," said Karl-Thomas Neumann the head of Volkswagen's Chinese operations, in an interview with the Wall Street Journal.
Volkswagen sold 2.26 million vehicles in China last year. China remains to be Volkswagen’s largest sales region.