(Yicai Global) Nov. 3 -- A number of multinational vehicle manufacturers and car parts makers are boosting their spending on research and development in China as the world’s second largest economy leads the way in the electrification and intelligentization of autos.

German car makers such as Volkswagen and BMW as well as auto components producers, including Bosch and Continental, all have R&D hubs in China so as to better meet consumers’ needs for digitization and smart inter-connection.

As a pioneer in smart connected vehicles, China is second only to the US in terms of autonomous driving algorithm research. It has cultivated strong talent pools in software, tech and other fields.

"Continental's tech center in Changchun, eastern Jilin province leverages China’s strengths in staffing and technology, which enhances its research and development ability," said Jiang Shaohui, China head of the Hanover-based company's passive safety and senior business division.

"A lot of emerging tech originates in China and is then gradually applied in other markets around the world," Volkswagen Chief Executive Oliver Blume said. "Hence, China will be a crucial experimental base for Porsche and will also bring huge returns on Porsche’s investments in innovation, tech and digital areas."

“Localized R&D innovation enables BMW to make full use of Chinese technological advantages in areas such as artificial intelligence and the fifth-generation network," said Franz Decker, president and chief executive of BMW’s joint venture with Brilliance Automotive.

Volkswagen’s auto software unit Cariad recently set up a Chinese division, tasked with developing software products for Chinese consumers and building a unified and extendable software platform suitable for all the group's marques.

German chemicals giant BASF is building its largest R&D hub in the Asia Pacific in Shanghai. The third phase of Innovation Campus Shanghai is expected to be completed by early 2023. And German auto components maker ZF Friedrichshafen broke ground on its fourth tech center in China, this time in Guangzhou, in March.

All of French tire maker Michelin’s teams that develop high-performance tires for the Asian market are in China, Matthew Ye, president and chief executive of Michelin China Investment, told Yicai Global. Thanks to the rapid development of the new energy vehicle industry in China, Michelin China has begun to set NEV tire standards and output tech to the company headquarters in Clermont-Ferrand, Ye said.

Tie-Ups

Foreign auto firms are also teaming up with Chinese companies to strengthen their own technical strengths. BMW and e-map maker NavInfo have set up a 5G cloud computing system. They then linked arms with internet giant Tencent Holdings and other firms to establish the world's biggest autonomous driving network control platform.

Honda and software engineer service provider Neusoft are conducting in-depth cooperation in NEV core tech and car sharing. While Toyota and carmaker BYD have set up an EV joint venture.

And more foreign firms are investing in Chinese startups.

Last month, Wolfsburg-based Volkswagen said it is investing EUR2.4 billion (USD2.4 billion) in a JV with auto chip startup Horizon Robotics that will develop customized smart driving solutions for the Chinese market.

Continental has bought into smart car tech firms Shanghai Enjoy Move Technology, Motovis and other startups to push forward its autonomous driving and smart tech agenda.

While Bosch has invested in 10 high-tech startups in fields ranging from automation, smart manufacturing and AI to semiconductors.

Every few months, a large European auto firm will give Gerlingen-based Bosch a list of the cutting-edge tech it is interested in and ask whether the startups that Bosch has invested in, especially the Chinese ones, are engaged in such tech, Jiang Hongquan, chair and managing partner of Bosch’s investment arm Boyuan Capital, told Yicai Global.

Editors: Tang Shihua, Kim Taylor