economy - Volkswagen starts 'Olympic' cost cutting operation

Volkswagen China announced a drastic cost cutting operation to turn around its loss making venture in the world's most promising market. In the first half of 2005 Volkswagen China loss 23 million euro, compared to a profit of 251 million euro last year, the Financial Times reports.
Volkswagen will limit its operation to the current two joint venture partners with respectively SAIC and FAW. It wants to bring down local material costs to an "internationally competitive price level".
Now the markets in China are still protected by tariffs and its cars and most of its car parts are relatively expensive, despite the low wages in China.
Earlier Delphi, previously owned by GM, announced it would close down US production units and try to use China-based manufactering to cut costs too.