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VW regrets non-exclusive contracts with Chinese partners

Changchun, China. Volkswagen has high growth and market leadership in China, but it's not entirely happy with the arrangements with its local partners.

VW Chairman Bernd Pischetsrieder said during a presentation of his China strategy that VW has a great deal to endure due to the contracts it signed many years ago with First Automotive Works (FAW) in Changchun and Shanghai Automotive Industry Corp. (SAIC).

Because there are no restrictions on its partners from working with third parties, SAIC has started a joint venture with General Motors and FAW will in future cooperate with Toyota.

"One of course wonders if it might have been possible to draw up contracts which rule out any partnerships with third parties," Pischetsrieder said, hinting at the reigns of his predecessors Karl Hahn and Ferninand Piech. "I have to say that it is difficult, just as it is in real life, to share a good partner with someone else," Pischetsrieder said.

As much as the VW boss would like an exclusive relationship with his Chinese partners, he says there may be some benefit in that the foreign companies can all apply pressure to demand changes from the Chinese companies.

"The weak area within the Chinese automotive industry are the suppliers. This sector is weak because our joint-venture partners have a monopoly on it," he said.

Pischetsrieder added that the most expensive components all come from VW's Chinese partners.

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