The arrival of the car manufacturer Chery in Barcelona last week has revived hope for the industrial sector in Spain. Two years after Nissan’s closure in Zona Franca, the reindustrialization of these facilities to assemble the Omoda electric model has been welcomed as a relief by Spanish authorities and workers alike. The investment will exceed €400 million, create 1,200 jobs, and production is projected to reach up to 150,000 cars.
Such industrial investments from the Far East are gradually gaining a foothold in Spain, and Chery is not the only example. In Barcelona’s province, Shanghai Jingqingrong Garment will start producing clothing this year in the town of Ripollet. Based in Shanghai, this company works for major brands like Uniqlo and H&M. An investment of around €3 million is planned, creating 30 jobs.
Diverse Initiatives
Navalmoral de la Mata (Cáceres) has been chosen by Envision to establish a battery plant with a €2.5 billion investment, creating approximately 3,000 jobs. Another example is Zhenshi Holding Group, which has purchased Airbus’s factory in Puerto Real (Cádiz, Andalucía) and plans to resume production after the summer.
In addition to the investment in Extremadura, Envision is also overseeing a wind turbine assembly project in Las Navas del Marqués (Ávila, Castilla y León) with a €110 million investment, generating up to 100 new jobs. The company also intends to establish a plant in Alcázar de San Juan (Ciudad Real, Castilla-La Mancha), expected to employ between 300 and 500 workers, with an investment around €900 million.
These initiatives reflect a trend reversal. At the end of the last century, Western manufacturers went to China for low labor costs; now, Chinese companies are starting to position themselves within European production. Manuel Fuertes, director of the Kiatt investment firm, explains, “China has increased its investments worldwide and has been preparing for years to set up factories in Europe. Labor costs in China are now much higher, and European wages have become competitive. Hungary was one of the first countries they started manufacturing in, and they see Spain as a bridge to increase their trade relations with Latin America and Africa.”
This new Chinese strategy is closely linked to the pressure the EU has started to apply on Chinese imports. At the end of 2023, the European Commission announced investigations into foreign brands exporting from China to check if they had benefited from any “illegal subsidies,” including brands like Tesla and European manufacturers. Investigations into subsidies for electric vehicles from China were also announced.
This week, the EU launched a new investigation against China due to barriers faced by European medical devices entering the Asian market, claiming that European companies face “unfair” discrimination.
“Brussels wants to correct the trade imbalance between the EU and China. The Asian giant’s commercial practices are seen as hostile, and establishing factories in Europe aims to avoid tariffs on Chinese production, as has happened in the United States,” says Mario Esteban, an Asia-Pacific researcher at the Real Instituto Elcano. “The Chinese production model needs to evolve, much like what happened with Japanese cars when they started being manufactured in the United States,” adds Esteban.
Thanks to the development of a strong domestic market, China’s economy is now ready to begin exporting its technology. “Currently, China produces added value, and that is what it wants to bring to Europe strategically. Brands like BYD are already manufacturing in Hungary, and their expansion into Spain is linked to their interest in getting closer to Latin America and Africa,” says Félix Valdivieso, president of the China Center at IE University.
Additionally, by partnering with local actors, Chinese companies aim to improve their image among European consumers. “They are delighted to collaborate with Spain’s reindustrialization. They create jobs and revitalize the area, making it very hard for anyone to oppose projects like these,” assures Fuertes. In Chery’s case in Barcelona, the company partnered with Ebro for the reindustrialization of Nissan’s old factory. Meanwhile, Envision has partnered with Acciona to secure renewable energy.
Revitalizing the Electric Car Industry
One of China’s industrial strengths has been its commitment to electric cars. Spain’s appeal for this type of production lies in its infrastructure and experience in the automotive sector. “Chinese manufacturers have developed very powerful electric vehicle technology in recent years and now want to expand it. Spain’s ecosystem of assembly plants, large ports, and excellent internal transport links are key factors,” says Ignacio Crespo, a KPMG Spain consulting partner. Chery founder Tongyue Yin noted that assembling their cars in Spain allows for reduced logistical costs.
Crespo points to Hungary and the Czech Republic as Spain’s strongest competitors in the race for electric vehicles. “These are countries with very competitive costs. Germany is also a very attractive country due to its subsidies,” he explains. In the case of electric cars, Chinese manufacturers are ahead of European ones, and the European Commission is keen to encourage the development of electric vehicles to accelerate the energy transition. “They account for nearly 8% of the European market, and their goal is to expand it,” says the partner at KPMG Spain.
