Layoffs and announcements of new investments by Chinese companies in the auto industry in Serbia

According to local media, several hundred workers were fired at this auto parts factory, and some of them gathered at the end of December to protest in front of the factory because of the layoffs.

"People cried (when they were fired) because they took out loans," said a worker of this factory to Radio Free Europe (RSE), who asked that her name not be published in order not to suffer potential retaliation from her former employer.

She says that the dismissals came without prior notice and notice period.

The company "Mei Ta" did not respond to RSE's questions about these layoffs.

On the other hand, 85 kilometers away, in Sremska Mitrovica, another Chinese company was visiting potential locations for a car factory.

We are talking about the company JMEV, which made a name for itself in the production of electric cars.

Representatives of this company visited Sremska Mitrovica, a city in northwestern Serbia, on two occasions this fall, visiting with local officials potential locations for their factory, which, as it was announced at the time, would produce around 5,000 electric cars a year.

For now, the arrival is only in the planning phase, but this investment is, according to the mayor of Sremska Mitrovica, Branislav Nedimović, "a big deal".

More information about everything will be known "when the time comes", the mayor and former vice president Vlade Nedimović said in a short statement to RSE.

Even potential Chinese investors did not specify how certain the opening of the factory is.

"As far as the project is concerned, you will all be informed in due time," Brankica Zjalić, representative of the "JMEV Serbia" project, told RSE.

Chinese manufacturers' interest in investing in Serbia comes at a time when the automotive industry in the European Union is facing a crisis.

Representatives of the European automotive industry have called on the EU institutions to take urgent measures to help as they try to cope with the crisis during the transition to a new technology - electric cars in order to reduce the emission of harmful gases.

In a document compiled in October by the internal research service of the European Parliament, it is stated that there has been a slowdown in the use of electric cars, as well as that the costs of vehicle production in the EU are about 30 percent higher compared to China.

 

Layoffs at 'Mei Ta'

The former worker "Mei Ta" told RFE/RL that she worked for many years in production at the factory in Obrenovac and that there was no notice of dismissal. The resignations, he says, were delivered on December 24 in the third shift.

"There was no reduction in production. We also worked on weekends," she says.

She told RFE/RL that in the previous period workers from India and Sri Lanka were trained in the factory and that she thinks they will come to the workplaces of the dismissed workers.

The company "Mei Ta" did not receive a response to these claims.

The Labor Law in Serbia prohibits the hiring of new workers in the same positions within three months of the termination of workers who are made redundant.

The Chinese company "Mei Ta" produces car parts in Serbia, and the first factory was opened in 2017. The second one was opened two years later and both are in Obrenovac, near Belgrade.

“Mei Ta" invested 150 million euros in both of its factories, and, according to the data of the Agency for Economic Registers, employs 2,740 workers.

 

Investment announcement without many details

On the other hand, representatives of the JMEV company have so far met twice with the mayor of Sremska Mitrovica, Branislav Nedimović.

After viewing potential locations for the factory in October, a second meeting was held, as reported by local media, in November.

The company JMEV (Jiangling Group Electric Vehicle) was founded in China in 2015. On its website, it states that since its establishment, they have sold over 100,000 electric vehicles.

 

Why do Chinese investors choose Serbia?

Several Chinese companies that produce auto parts operate in Serbia. One of the largest is the "Linglong" car tire factory in Zrenjanin, in the north of the country.

It was officially opened in September, although at least one of its three plants has been producing and exporting tires for more than a year.

It employs over 1,200 Serbian workers, and Linglong, as stated in the company's financial report, produced and sold tires worth around 29 million euros during 2023.

The factory was built for five years, and during that time "Linglong" was followed by accusations about the poor working conditions of the employees on the construction of the factory, as well as complaints about violations of the law in the field of construction and environmental protection.

 

Non-governmental organizations in Serbia pointed out that "Linglong" does not have a unique environmental impact assessment.

In 2021, the construction of the factory was followed by suspicions of the exploitation of hundreds of workers from Vietnam, who were engaged in the construction of the factory at that time.

Another Chinese factory from the auto industry was opened in the west of Serbia. It is about the company "Minth", which produces components for the automotive industry and was opened in 2022.

The company realized its first phase of investment in Loznica, the value of which was estimated at 100 million euros, and then expanded its operations to the neighboring town of Šabac.

In 2019, the Chinese company "Yanfeng Automotive Interiors" opened a factory for the production of components for automotive interiors in Kragujevac, in central Serbia.

RFE/RL did not receive an answer from these companies about their plans when it comes to doing business in Serbia, as well as for what advantages and benefits they chose Serbia.

Igor Vijatov, director of the Automotive Cluster of Serbia, says that one of the factors for coming to Serbia is cheap labor, but that this has also changed over time.

"The price of labor is still lower than in the European Union, but it is no longer possible to find workers who would work for 300 euros, even before the minimum price of labor increased," explains Viatov.

The minimum wage in Serbia in 2024 is around 400 euros, and in 2025, it is estimated that it will be around 440 euros. The average net salary in Serbia in September was 820 euros.

According to Vyatov, Chinese companies, as well as other foreign investors, receive state subsidies.

According to the data of the State Development Agency of Serbia, they can receive subsidies based on the number of new jobs they plan to open in a period of two years. Also, state aid includes money for means of work.

 

Production in Serbia, export to the EU

Director of the Automotive Cluster of Serbia, Igor Vijatov, says that the auto industry in Serbia is largely dependent on large car manufacturers in the European Union, where the auto industry is in crisis.

"What has been happening lately is that more and more Chinese manufacturers of automobile parts are contacting us, considering the possibility of coming to Serbia in order to export to the European Union," he says.

According to the data of the American newspaper New York Times, China sold 1.7 million electric cars abroad in 2023, almost 50 percent more than the second largest exporter, Germany.

Viatov also believes that there are risks when it comes to Chinese investments in the auto industry in Serbia.

He says that investors often do not hire suppliers from Serbia, but that "they bring raw materials or semi-finished products from China, and here (in Serbia) they actually only finish them".

 

"But if they want to export duty-free to the European Union, 50 percent of the products they install must be produced in Serbia, that makes them think a little bit," he says, adding that this condition is good for Serbia because it ensures the engagement of more companies in Serbia. and better investments.

Perspectives of Chinese companies in the EU

Ferdinand Dudenhofer, director of the "Center Automotive Research" research institute in Bochum, Germany, tells RFE/RL that China is a "high-tech country" and that is why Chinese companies have technological advantages on the EU market.

The Atlantic Council, a Washington-based think tank, announced in February that China's total exports of electric cars will grow by 70 percent in 2023, reaching $34.1 billion.

"The European Union (EU) is the largest recipient of Chinese exports of electric cars, accounting for almost 40 percent," according to the "Atlantic Council".

Dudenhofer states that Chinese cars are competitive in the EU because "they have lower costs, are of very high quality and in some cases are technological leaders for battery electric drive".

He, on the other hand, states that the obstacles for Chinese companies in the EU are "political".

In October, the European Union introduced tariffs on electric vehicles imported from China for a period of five years.

In its explanation, the European Commission stated that there was a jump in sales of electric cars from China "with the help of subsidies in the entire production chain".

Namely, Chinese car manufacturers receive cheap government loans, cheap land and direct incentives for the sale of electric vehicles, the European Commission explains, adding that for these reasons they pose a threat to European manufacturers.

On the other hand, in a document compiled in October by the internal research service of the European Parliament, it is stated that European manufacturers are lagging behind when it comes to innovations in the production of electric vehicles, especially due to the high cost of batteries.

Certain manufacturers in the auto industry in the EU, as stated in the document, previously announced layoffs and factory closings "partially fueled by concerns about the slowdown in the use of electric vehicles in the EU."

The registration of battery-powered cars in the EU fell by 43.9 percent in August 2024 compared to the same period of the previous year, according to data from the European Association of Automobile Manufacturers.

 

 

CONCLUSION

Another example of non-transparent business practices of Chinese companies in the Western Balkans, this time in Serbia. On the one hand, we have claims from workers that the Chinese company is laying off workers and suspicions that workers from Serbia who have been laid off will be replaced by cheaper labor from India and Sri Lanka. On the other hand, according to common practice, Chinese companies operating in Serbia do not advertise. Almost simultaneously, other Chinese companies in other locations in Serbia are expressing interest in opening new plants.

This behavior of Chinese companies when it comes to workers from Serbia should at least be a signal of caution to the authorities in Serbia, but also to other Western Balkan countries. However, we are witnessing that all the media reports, claims by non-governmental and international organizations about the behavior of Chinese investors in the Western Balkans rarely result in an adequate reaction from the competent state institutions in terms of investigations, inspections, etc.

In this specific case, experts in the automotive sector, where the Chinese company that is laying off workers from Serbia operates (according to the workers' claims), point out that Chinese automotive companies that have plants in Serbia do not actually produce, but  they are finishing, auto parts.