Comment Volkswagen, Export Controls and Postponed China Trips: The New Reality of Globalization

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Rödl Rechtsanwaltsgesellschaft Steuerberatungsges. mbH

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What happens when China increasingly uses export controls as an industrial policy tool? The example of VW and Nexperia shows how quickly it can happen.

The potential production halt at Volkswagen due to missing Nexperia chips and the postponement of Foreign Minister Wadephul's trip to China exemplify how closely technology, politics, and the economy are intertwined today. What would once have been a logistical problem can now become a geopolitical risk case. Although Nexperia originates from the Netherlands, it is owned by Chinese proprietors. After The Hague, under pressure from the US, partially took control of the company, Beijing responded with export restrictions. Within a few weeks, such a political signal can turn into a real economic production crisis.

China has long been using export controls as an industrial policy instrument. The goal is not only to protect national security interests but also to strategically manage technological dependencies. The state defines which goods and technologies are considered "sensitive" and deliberately retains leeway to react politically flexibly. For companies, this means that supply chains can suddenly freeze.

At the same time, China is deliberately establishing incentive systems for its domestic industry. With the new standard for "domestic products" in public procurement—effective from 2026—providers whose products meet these criteria will benefit from a 20 percent price evaluation discount. The message is clear: self-sufficiency, local value creation, and technological independence take priority.

For international companies, this means that risk management becomes a strategic core task. German mid-sized companies are increasingly responding with "China + 1" strategies—they remain active in the country but create additional capacities in other Asian markets. At the same time, new forms of localization are emerging within China, such as through in-house R&D units or joint ventures. The trend is: "China for China" or "China for China and for Global."

In the coming years, we do not see a departure but rather a readjustment of relationships. China remains a partner, market, and competitor at the same time. However, China is also a regulatory actor with its own agenda. Those who understand and adapt to the economic and legal framework can continue to succeed.

German politics should support this pragmatic approach. Opportunities exist primarily in the areas of modern manufacturing, automation, AI, green transformation, aerospace, and medical technology. The example of Volkswagen serves as a reminder to take risks seriously without losing sight of the potential.

The case vividly illustrates how fragile international supply chains have become under geopolitical pressure. From a legal perspective, this is less about a classic trade barrier and more about the targeted application of Chinese export control law. The law, in effect since the end of 2020, allows the government to prohibit exports of certain goods if national security interests are affected. What is considered "sensitive" or as "national security interests" is deliberately left undefined. This represents an uncertainty factor for companies that depend on predictability.

In practice, this can shut down entire production lines if essential components or software modules can no longer be delivered. The risk no longer pertains solely to semiconductors but also to battery materials, specialized machinery, and technologies. Companies should integrate such scenarios into their risk planning, not only technically but also legally.

A central lever is contractual resilience. Supply agreements usually include force majeure clauses designed for pandemics or natural disasters, but not for government export bans. In the future, more precise regulations will be needed to address governmental interventions, information obligations, and alternative procurement routes. Additionally, compliance systems should be regularly reviewed for export control and sanction risks.

Companies that continue to use China as a supplier or production location must diversify and legally secure their supply chains. This includes a careful analysis of potential vulnerabilities and the establishment of alternative suppliers in third countries. Equally important is a clear internal process to respond quickly to regulatory changes. Geopolitical compliance is no longer a side issue but a part of modern corporate management.

The lesson from the Volkswagen case is: legal and planning security become a competitive advantage. Those who implement legal protection mechanisms early remain capable of acting even in a politically tense environment. China will remain a central partner of the German economy for the foreseeable future. However, the rules of the game are changing. Strategic flexibility and legal precision are the keys to thriving in this new era of globalization.

Sebastian Wiendieck is a lawyer, partner, and head of the legal department at Rödl & Partner China

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