Why did CATL choose to build a factory in Hungary? Does Hungary have any unique industrial advantages?

First, the automobile industry has a good foundation

A cold knowledge: Although Hungary does not have a well-known global passenger car brand, it is a country with a long history of the automobile industry.

Soon after the establishment of diplomatic relations between the People’s Republic of China and Hungary in 1949, China began to import Hungarian-made cars, of which the most well-known in China were the Icarus coaches and buses. truck.



After joining the EU, Hungary has become an important industrial transfer location for the German auto industry.

Hungarian auto industry exports account for 20 percent of Eastern Europe’s auto exports, which many analysts refer to as the “Detroit of the East”. In 2007, Hungarian automobile exports reached 10.4 billion US dollars, and engine exports reached 6.73 billion US dollars. The Hungarian automobile industry employs 100,000 people, accounting for 1% of the total number of residents.

As the world’s largest power battery manufacturer, CATL must build factories wherever its customers are. The main reason for choosing to build a factory in Hungary is the good foundation of the automobile industry in Hungary, with a large number of auto OEMs distributed.

At present, 14 of the world’s 20 largest automakers have complete vehicle or parts production bases in Hungary, including Mercedes-Benz, Audi, BMW, PSA, etc.


Mercedes-Benz is about to increase its investment in Hungary to add an electric vehicle production line.


Second, the location advantage

The second advantage of building a factory in Hungary is its location advantage. Hungary is located in Central Europe, close to the Czech Republic, Austria, Germany, Poland, Romania and other countries. These countries also have developed automobile industries and can become potential customers of CATL.


Third, transportation advantages

Although Hungary is deep in the European continent, it has long been connected by sea and rail, and has become a key node of the Belt and Road Initiative in Europe.

The China-Europe Land-Sea Express Line passes through the port of Piraeus in Greece as a shipping node, passes through North Macedonia and Serbia by rail, and finally arrives in Budapest, the capital of Hungary. Through this channel, it can ensure that CATL and other Chinese-invested enterprises in Hungary maintain smooth logistics with China.


Fourth, economic advantages

Hungary is a developed European country with a total GDP of 55 trillion forints (about 158.18 billion U.S. dollars) in 2021, with a GDP growth of 7.1%. GDP per capita is about $16,000.

Hungary has a population of about 9.8 million, and its economy and population are close to that of Dongguan City, which is comparable to that of prefecture-level cities in the economically developed regions of the Yangtze River Delta and Pearl River Delta.

At the same time, its average wage level is relatively low, and it has certain advantages for cost-sensitive manufacturing. According to data from the Hungarian Central Bureau of Statistics, in 2021, the average pre-tax salary in Hungary is 439,000 forints (about 1,313.9 US dollars, 8,906 yuan), and the average after-tax salary is 292,000 forints (about 874 US dollars, 5928 yuan)

Fifth, political advantages

Although investment is an economic issue, in such a sensitive region as Europe and the current general trend of intensifying confrontation between China and the United States, political issues have to be considered.

Not long ago, CATL announced the suspension of the North American factory project, which is obviously related to political risks.

Foreign media said that the Ningde era suspended the North American factory project, how to interpret the move from a commercial perspective? What impact will it bring?

Hungary is precisely a relatively pro-China member among many European countries with strong anti-China awareness.

Since taking office, Hungarian Prime Minister Viktor Orban has relatively adhered to a pro-China policy and has carried out a series of cooperation with China: Hungary is the first European country to sign a memorandum of understanding on the “Belt and Road” cooperation with China, and the first to set up a RMB clearing bank. Central and Eastern European countries, the first European country to open a bilingual school in Hungarian and Chinese.


When investing in European countries, which belong to the EU and are relatively pro-China, Hungary is of course the first choice.

Source: Zhihu www.zhihu.com

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Further reading:

CATL plans to invest no more than 7.34 billion euros in the construction of a new energy battery industrial base project in Hungary. How to interpret this move from a commercial perspective?

CATL plans to set up a new factory in Europe to improve supply capacity. How will this help the development of the company?

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