Paper short abstract:

The study uses the case of China’s li-ion battery investments in Europe to investigate how the geopolitical tensions and uncertainties of different scales shape the formation process of Global Production Network and allow lead firms from emerging economies to inversely expand to advanced economies.

Paper long abstract:

To confront human-induced climate change and seize the next wave of industrial revolution, China is actively promoting the diffusion of renewable energy technologies and has cultivated its massive electronic vehicle (EV) and lithium-ion battery production capacity and market in the past two decades. Since the market and technology burst in around 2020, the Chinese lithium-ion battery industry has held up to 60% of the global market, while the new lead firm, Contemporary Amperex Technology Limited (CATL), alone supplies over 30% globally (as of H1, 2022). Not satisfied with the rapidly booming domestic market and encouraged by China’s “Going-out strategy”, CATL is proactively expanding to install new capacities overseas, such as strategically coupling with conventional European carmakers and building production lines in Erfurt, Germany and Debrecen, Hungary. Meanwhile, with the increasing geopolitical tensions between China and the West, and the rising of protectionism and reverse globalization around the world, more countries applied reshoring and “friendshoring” policies to keep production networks (PN) domestic or within allies that are seemed secured. This provides an additional pull force for China’s EV battery industry to move to Europe. Therefore, through this case study, I will explain how the geopolitical tensions and uncertainties of different scales shape the formation process of Global Production Network (GPN) and allow lead firms from emerging economies to inversely expand to advanced economies.