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Some workers at the Chinese company Mei Ta, located near Belgrade, ended 2024 with terminated employment contracts.
According to local media reports, several hundred workers were laid off at this auto parts factory, and some of them gathered for a protest outside the factory at the end of December in response to the dismissals.
“People were crying (when they were fired) because they had taken out loans,” said a factory worker to Radio Free Europe (RSE), requesting anonymity to avoid potential retaliation from her former employer.
She stated that the layoffs came without prior notice or a termination period.
The Mei Ta Company did not respond to RSE’s inquiries regarding these layoffs.
Meanwhile, 85 kilometres away in Sremska Mitrovica, another Chinese company was scouting potential sites for a car manufacturing plant.
The company in question, JMEV, specialises in the production of electric cars. Representatives of the company visited Sremska Mitrovica twice this autumn, touring potential locations for a factory in the northwestern Serbian town. The plant, as announced at the time, would produce around 5,000 electric cars annually.
At present, the project is still in the planning phase, but according to Branislav Nedimović, the mayor of Sremska Mitrovica, the investment is a “big deal.”
“More information will be available when the time comes,” said Nedimović, a former Deputy Prime Minister, in a brief statement to RSE.
The potential Chinese investors have not provided details about the likelihood of opening the factory.
“Regarding the project, you will all be informed in due time,” said Brankica Zjalić, representative of the JMEV Serbia project, in a statement to RSE.
Chinese interest amid EU auto industry challenges
The interest of Chinese manufacturers in investing in Serbia comes at a time when the automotive industry in EU countries is facing a crisis.
Representatives of the European automotive industry have called on EU institutions to take urgent measures to support them as they struggle during the transition to new technologies, specifically electric vehicles aimed at reducing harmful emissions.
A document compiled in October by the European Parliament’s internal research service highlights a slowdown in the adoption of electric vehicles and notes that production costs in the EU are approximately 30% higher compared to those in China.
Layoffs at Mei Ta
A former Mei Ta worker told RSE that she had worked in production at the Obrenovac factory for years and that the layoffs came without warning. According to her, dismissal notices were handed out during the night shift on 24 December.
“There was no reduction in production. We even worked weekends,” she said.
She also stated that workers from India and Sri Lanka had been trained at the factory recently and speculated that they would replace the dismissed workers.
The company Mei Ta has not responded to these allegations.
Serbian labour law prohibits hiring new workers for the same positions within three months of layoffs due to technological redundancy.
The Chinese company Mei Ta produces auto parts in Serbia. Its first factory opened in 2017, and the second two years later, both in Obrenovac near Belgrade.
Mei Ta has invested €150 million in its two factories, which employ 2,740 workers, according to the Serbian Business Registers Agency.
Investment announcement
On the other hand, representatives of JMEV have met twice so far with Sremska Mitrovica Mayor Branislav Nedimović.
After scouting potential factory sites in October, a second meeting was held in November, as reported by local media.
JMEV (Jiangling Group Electric Vehicle) was founded in China in 2015. According to its website, the company has sold over 100,000 electric vehicles since its inception.
Why do Chinese investors choose Serbia?
Several Chinese companies in Serbia are involved in manufacturing auto parts. One of the largest is the Linglong tyre factory in Zrenjanin, in the north of the country.
The factory was officially inaugurated in September, although at least one of its three production units had been manufacturing and exporting tyres for over a year.
It employs over 1,200 Serbian workers, and according to the company’s financial report, Linglong produced and sold tyres worth approximately €29 million in 2023.
The factory took five years to construct, during which time Linglong faced allegations of poor working conditions for construction workers and complaints about violations of construction and environmental protection laws.
Non-governmental organisations in Serbia pointed out that Linglong lacked a unified environmental impact assessment.
In 2021, suspicions arose over the exploitation of hundreds of Vietnamese workers employed during the factory’s construction.
Another Chinese factory in the auto industry opened in western Serbia. The company Minth, which produces components for the automotive sector, began operations in 2022.
The first phase of Minth‘s investment was implemented in Loznica, valued at €100 million, before expanding to the neighbouring city of Šabac.
The Chinese company Yanfeng Automotive Interiors opened a factory in 2019 in Kragujevac, central Serbia, producing components for car interiors.
RSE received no response from these companies about their business plans in Serbia or the reasons why they chose the country for their investments.
Affordable workforce and incentives
Igor Vijatov, director of the Serbian Automotive Cluster, explained that one of the reasons for choosing Serbia is affordable labour, although this has changed over time.
“The cost of labour is still lower than in the European Union, but it’s no longer possible to find workers willing to work for €300, even before the minimum wage increased,” Vijatov explained.
The minimum wage in Serbia in 2024 is around €400, and it is estimated to rise to €440 in 2025. The average net salary in Serbia in September was €820.
According to Vijatov, Chinese companies, like other foreign investors, benefit from state subsidies.
The Serbian Development Agency provides subsidies based on the number of new jobs a company plans to create within two years. Additionally, government assistance includes funds for equipment and tools.
Production in Serbia, export to the EU
Vijatov noted that Serbia’s automotive industry heavily relies on major car manufacturers in the European Union, where the auto sector is currently in crisis.
“Recently, we have seen more Chinese manufacturers of auto parts considering Serbia as a base for exporting to the EU,” he said.
According to The New York Times, China sold 1.7 million electric vehicles abroad in 2023, nearly 50% more than Germany, the second-largest exporter.
Vijatov also highlighted risks associated with Chinese investments in Serbia’s auto industry.
He explained that investors often do not engage local suppliers in Serbia; instead, they import raw materials or semi-finished products from China for final processing in Serbia.
“However, if they want to export tariff-free to the EU, 50% of the components in their products must be produced in Serbia. This forces them to reconsider,” he said, adding that this condition benefits Serbia by ensuring the involvement of more domestic companies and improving investment quality.
Prospects for Chinese companies in the EU
Ferdinand Dudenhöffer, director of the Center Automotive Research Institute in Bochum, Germany, stated that China is a “high-tech country,” giving its companies a technological edge in the EU market.
The Washington-based Atlantic Council reported in February that Chinese electric vehicle exports grew by 70% in 2023, reaching $34.1 billion.
The EU is the largest recipient of Chinese electric vehicle exports, accounting for nearly 40%, the Atlantic Council noted.
Dudenhöffer explained that Chinese cars are competitive in the EU because they are “less expensive, of very high quality, and, in some cases, technologically leading in battery-powered electric propulsion.”
On the other hand, he noted that the obstacles for Chinese companies in the EU are “political.”
In October, the EU introduced tariffs on Chinese-imported electric vehicles for five years.
The European Commission justified the move by citing a surge in Chinese electric car sales supported by subsidies across the production chain.
Chinese manufacturers reportedly receive low-interest state loans, cheap land, and direct incentives for selling electric vehicles, posing a threat to European producers, according to the European Commission.
Meanwhile, an October report by the European Parliament’s internal research service highlighted that EU manufacturers are lagging in innovation for electric vehicle production, particularly due to the high cost of batteries.
Some EU automakers have announced layoffs and factory closures, partly driven by concerns over the slowing adoption of electric vehicles in the EU.
Battery-powered vehicle registrations in the EU fell by 43.9% in August 2024 compared to the same period the previous year, according to data from the European Automobile Manufacturers’ Association.
(Radio Free Europe, 06.01.2025)
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