[Heavy Industry ON] "Factories Are Built Fast"... Chinese Battery Firms Targeting Europe Face Hurdles in Operation

The Questions Raised by Netflix's "American Factory"

Still Relevant for Chinese Battery and EV Companies Entering Europe

Labor Culture and Environmental Regulations Emerge as New Variables

The Netflix documentary "American Factory," released in 2019, chronicled how the Chinese glass company Fuyao acquired and reopened a shuttered General Motors plant in the United States. The clashes between the Chinese management style, which prioritizes productivity above all else, and American labor culture demonstrated that overseas expansion involves challenges far beyond simple investment. Seven years later, the same question now faces Chinese battery and electric vehicle companies heading into Europe.

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According to the battery industry on July 11, Chinese battery companies have rapidly expanded their influence in the global market, leveraging their price competitiveness and large-scale mass production capabilities beyond their domestic market. In response, the United States implemented the Inflation Reduction Act (IRA), while Europe has shifted its policy direction to reduce reliance on Chinese products and increase local production under the "Made in Europe" initiative. For Chinese companies, simply exporting is no longer sufficient; securing local production bases has become an essential strategy.

These moves have accelerated in recent years. CATL is not only operating a plant in Germany but is also building a factory in Debrecen, Hungary. BYD is establishing its first European production plant in Hungary and is even considering acquiring existing automotive plants in Spain and France. This strategy, known as "brownfield" investment—utilizing existing facilities instead of building new ones—aims to expedite their entry into the European market.

However, as the pace increases, so do the controversies. In June, CATL faced a lawsuit from local residents in Hungary over wastewater discharge issues, while in April, BYD was accused of labor exploitation in Hungary. Back in December of last year, 220 Chinese workers were rescued by local authorities from poor working conditions at a construction site for a factory in Brazil. While the facts of each case differ, these incidents highlight that "building a factory" and "operating a factory within local systems and cultures" are fundamentally separate challenges.

An industry insider commented, "In the battery industry, it is more difficult to operate a factory stably in a local environment than to set up production facilities. To secure long-term competitiveness, it is necessary to manage not just the working environment and regulations, but also relationships with the local community."

Ultimately, the key issue is localization. The "996" culture (working from 9 a.m. to 9 p.m., six days a week) and strong performance-driven organizational culture, often seen as the backbone of China's manufacturing competitiveness, are considered strengths in China. However, they are likely to come into conflict with Europe's strict labor regulations, union culture, and environmental and safety standards.

Another industry official noted, "In the European market, operational capabilities are more important than production capacity. Experience in managing factories while dealing with local labor relations and environmental regulations is an asset that cannot be built up in a short period of time."

From this perspective, domestic battery companies are regarded as having accumulated relatively advanced experience. SK On operates production bases in Komarom and Ivancsa, Hungary; LG Energy Solution runs a facility in Wroclaw, Poland; and Samsung SDI operates in God, Hungary. Their experience over several years in managing factories while cooperating with European labor relations, environmental regulations, and local communities is seen as a competitive edge that is difficult to replicate.

The aggressive push by Chinese companies into Europe is undoubtedly a burden for the domestic battery industry. However, industry perspectives suggest that simply expanding production capacity is not enough to guarantee success in the European market. One industry insider remarked, "In Europe, the stability of factory operation is considered more important than how quickly a plant is built. How swiftly Chinese companies adapt to the local business environment will be a key variable in future competition."

This content was produced with the assistance of AI translation services.