Volkswagen arrived in China in 1983 with a handshake and a Santana model rolling off the line in Shanghai. By 1984, the two sides had signed a joint-venture agreement, each expecting something different from the deal. China wanted a modern car industry. Volkswagen wanted Chinese consumers. What followed was decades of deliberate, sometimes difficult work to make sure China got what it actually came for.
The early results were underwhelming. Nearly all of the Santana's parts were still imported, which meant China had a car assembly plant but little else. Local suppliers could not meet German quality standards without expensive new equipment, and they were not willing to invest without guaranteed orders. Shanghai's municipal government stepped in, set up a localisation office, used a levy on Santana sales to finance supplier upgrades, and brought in retired German engineers to train workers on the ground. By the late 1990s, between 80% and 90% of Santana components were being sourced locally. China had not just built cars. It had built a supply chain.
That gap between assembling a product and building an industry around it is exactly where many African countries find themselves today. Zambia is a striking example. In 2023, nearly all of its mined copper underwent some form of domestic processing, yet only around 1% was absorbed by local manufacturing, according to analysis from the International Institute for Sustainable Development. Chinese investment has helped expand processing, including at the Chambishi Multi-Facility Economic Zone, but a 2024 report for Japan's development agency JICA flagged concerns from Zambian entrepreneurs about the zone's heavy reliance on Chinese imports and its weak connections to local businesses.
The broader question is not whether African governments should welcome investment from Beijing or Washington. It is whether they can use the competition between the two to extract more than factories and financing. New partnerships can just as easily replace old dependencies with fresh ones. The China-Volkswagen story took political will, targeted intervention, and years of grinding effort to produce results that actually served Chinese interests. That kind of patience and strategy is what turns a deal on paper into leverage that lasts.
Originally published by African Business.