German car giant Volkswagen is undertaking extensive austerity and downsizing operations, including eliminating tens of thousands of jobs and closing four factories in Germany, but in return it intends to expand its operations in the city of Hefei in eastern China and turn it into a global center. The head of the company's branch in China, Ralf Brandstetter, announced during the first "Technology Day" organized by the group in China today, Wednesday (October 28, 2026), that the company's previous strategy, which was based on the principle of "in China for China," is now turning into "in China for the sake of beyond China."
The city of Hefei in Anhui Province, known as the City of Science and Technology in China, is the second largest development center for Volkswagen after Wolfsburg, where its headquarters is in Germany. In recent years, the company has turned the Chinese city into a major center for its activities directed to the markets of the Global South. Data indicate that the majority of workers there are Chinese, numbering about 3,000 engineers and developers, while Volkswagen's investments in the site amounted to about 3.5 billion euros.
Brandstetter said that Volkswagen began exporting cars from China to seven countries this year. The company aims to increase exports to 300,000 cars annually by the end of the current decade, and to various parts of the world.
Volkswagen also developed its own integrated technological system, including an electronic architecture called the “Chinese Electronic Architecture,” software for autonomous driving, in addition to multiple technical platforms that form the basis for different car models. Volkswagen also intends to export these technologies to global markets.
In a step that reflects this new trend, the company intends to convert its first factory in Latin America, which according to internal sources is likely to be in Brazil, to produce models developed in China. Therefore, the name of the “China Main” platform, which was developed in Hefei as a basis for compact cars intended for the Chinese market, will be changed to the “Main Global Platform,” indicating its transformation into a global platform that serves multiple markets around the world, according to an economic report on the website of the German newspaper Frankfurter Allgemeine Zeitung.
In light of the decline in the Chinese car market, including the decline in Volkswagen sales as well, and the intensification of competition from Chinese companies in foreign markets, the German car giant intends to amend its strategy in China, and described this step as a “decisive change” that consolidates China’s position not only as one of the group’s most important markets, but also as a major center for innovation and export in its global business. In the future, Volkswagen aims to use its development and production network in China to serve additional markets in Southeast Asia, South Africa and South America.
Ralph Brandstetter believes that the country's car market is under great pressure, noting that the entire Chinese market is in a state of free decline, attributing this to consumers' concerns about their jobs and their declining confidence in the future. He added that car sales in China amounted to more than 24 million vehicles during the year 2025, while market researchers expect it to decrease during the current year to less than 19 million cars.
Despite the increasing global expansion of Volkswagen's Chinese branch, Brandstetter strongly rejected the issue of competition between Hefei and Wolfsburg, explaining that Volkswagen has two separate technological fields: one dedicated to the Western world, and the other in China covering the markets of the countries of the Global South. According to Volkswagen, it is the technology being developed in China that makes export expansion possible, thanks to lower development costs and shorter times to market.
Volkswagen Group President Oliver Blume also stressed the importance of China, describing it as the group's "innovation engine." According to the new strategy, Volkswagen has already begun exporting cars manufactured in China to a number of foreign markets, including the Middle East, Kazakhstan and Uzbekistan, and plans to expand the list to include Mexico, Egypt, Vietnam and Australia.
