The European Union is planning to introduce new regulations that would establish multiple restrictive conditions for Chinese companies seeking access to its key markets, with provisions on forced technology transfer drawing significant attention.
These regulations would also mandate companies to utilize a certain quota of EU goods and labour, and increase the value added to products within the EU.
According to Bloomberg, the new rules, part of the legislative proposal dubbed the Industrial Decarbonisation Accelerator Act, are scheduled for official release in November. While nominally applicable to all non-EU enterprises, their core objective is squarely aimed at Chinese companies possessing competitive advantages in sectors like new energy.
On October 15, China’s Foreign Ministry responded, stating that as a matter of principle, China supports trade and investment cooperation between Chinese and European enterprises based on market principles for mutual benefit. It opposes forced technology transfer that violates WTO (World Trade Organization) rules, interference in the normal production and business operations of enterprises, and protectionist and discriminatory practices under the guise of “enhancing competitiveness.”
In recent years, through a series of measures including the Regulation (EU) 2023/1542 on Batteries and Waste Batteries, the Critical Raw Materials Act, and the Net-Zero Industry Act, the EU has implemented various subsidies for electric vehicles and imposed requirements on local battery production capacity and raw materials, aiming to raise the entry barrier for Chinese batteries and supply chains.
The regulation currently under consideration by the EU is arguably its most radical market access policy in recent years. Based on disclosed information, its core components include three aspects: forced technology transfer, local involvement requirements, and mandatory establishment of joint ventures.
Beyond forced technology transfer, the localization requirement stipulates that at least 40% of the product’s raw materials and manufacturing processes must originate from the EU, directly challenging China’s cost-advantageous model of “exporting complete products with local assembly.”
The mandatory establishment of joint venture scheme dictates that companies refusing technology transfer would be compelled to form joint ventures with local EU enterprises, with the EU partner holding no less than a 35% stake.
In fact, as early as November last year, the EU contemplated making technology transfer a prerequisite for battery companies to receive subsidies, exemplified by a €1 billion battery development subsidy program last December.
This implies that for Chinese battery companies to supply the European market in the future, they would not only need to share battery patents with local partners, but also ensure over 40% of raw materials come from EU-certified mines and hire at least 35% of technical workers from the EU. Furthermore, Chinese companies investing in local production facilities face risks such as equity dilution and weakened control over core operations.
Source: WeChat Official Account——起点锂电
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