When a German corporation develops cars in China, for China, with Chinese employees, and finances them with German money, in what sense is it still German? The question sounds rhetorical. It is not. It forces a distinction that is almost never made in public debate — the distinction between the different layers in which a corporation is German, or once was. These layers do not erode in step. Some remain intact for a long time while the substance beneath them has long since moved elsewhere. Whoever wants to understand the erosion must first name the layers.
This paper is the follow-up diagnosis to three predecessors that described the phenomenon from three angles — the financial destruction of wealth in Stupid German Money, the operational micro-pattern in the Clearance Sale of the Schaeffler–Leju Robotics partnership, and the macroeconomic structural shift in The Lights Go Out. Here the question is put about the substance itself: what is still German today — and what will it be in ten years?
I. Five layers
A corporation is German in five layers. The layers are not anchored equally deep, and they do not erode equally fast. Whoever looks at only one layer does not see the phenomenon.
Legal. The corporation is a German Aktiengesellschaft (public limited company) headquartered in Germany, entered in the German commercial register, subject to German stock corporation law. The supervisory board model is German, co-determination is anchored in law. This layer is the most stable. It can be changed — by relocating the registered office, by conversion into a Societas Europaea, by takeover in the course of a merger — but such changes are visible and politically contested. They happen rarely and slowly.
Financial. Who owns the corporation? Who controls it? Who profits from its success? This layer is more mobile than the legal one. Shareholder structures change continuously, family holdings are diluted over generations, institutional investors — BlackRock, Vanguard, pension funds, sovereign wealth funds — gain weight. In most DAX corporations today, the free float is held mainly by non-German institutional shareholders. The family holdings that still exist are often themselves internationally diversified.
Operational. Where does value creation take place? Where is research, development, production, sales? This layer is the most volatile. It changes from quarter to quarter with every investment decision, every plant closure, every relocation of research units. It is also the layer in which the devaluation is most clearly visible, because it can be measured in figures — revenue shares by region, R&D headcount by site, patent applications by subsidiary.
Cultural. In which language are decisions made in the corporation? What self-image does the leadership team carry? What values are conveyed in its communication? This layer is subtler than the others, but more effective than it looks. When board meetings are held in English, when half of top management was born abroad, when the strategic buzzwords come from American consulting discourse, then the corporation is culturally international, even if its address is in Wolfsburg, Stuttgart or Munich.
Strategic. For which market does the corporation act? In which political order does it see itself located? Whose interests does it represent when they collide? This layer is the deepest — and it is the layer that tests most thoroughly whether a corporation is still German. If, in a conflict between Germany's interests and the interests of its most important foreign market, the corporation chooses the latter, it is strategically no longer German — whatever the commercial register says.
II. Volkswagen — the ongoing case
Volkswagen is the ongoing case in which all five layers become visible at once. The erosion is not complete — it is happening now, within the lifetime of today's observers. The corporation that since 1937 has understood itself as the epitome of German mass motorisation is in the process of becoming a globally held holding company with Chinese value creation and a shrinking German operation.
The figures are unambiguous. In China — still the most important market — sales fell last year by eight per cent to under 2.7 million vehicles. Measured against its own plans, the corporation is losing €60 billion in revenue a year in China. The original target for 2030 — 3.5 to 4 million vehicles — has been reduced to 3.2 million. In the decisive future segment of electric cars, the combined market share of VW and Audi in China stands at 0.5 per cent. Hardly anyone there wants the ID-family models developed in Germany. The profit margins of the past — over ten per cent — are classed as historical. The new target is four to six per cent by the end of the decade. Brandstätter, head of VW China, does not expect prices to rise again or competition to ease.
What VW is doing in response to this situation is the completion of the Schaeffler pattern at the level of the core business. At Auto China 2026 in Beijing the corporation presented a series of models that would mean nothing to anyone in Germany — the ID.ERA 9X with range extender and a thousand kilometres of range, the ID.AURA T6, ID.UNYX 08 and 09, the electric SUV Jetta X for the equivalent of ten thousand euros. Models that are not offered in Germany because they are not made for the German market. While VW is putting physical buttons back into its new models for Germany, in Beijing it presents vehicles with large displays on the passenger side, with voice-assistant systems that integrate Chinese apps, with design languages oriented towards Chinese competitors rather than the Wolfsburg heritage.
That is not localisation. Localisation would be offering the same Golf in a Chinese variant. What VW is doing now is creating a parallel corporation with its own product world, its own design language, its own software architecture, its own supply chains — all in China, all for China, all with Chinese engineers and designers, all financed from Wolfsburg.
Today the five layers read as follows. Legally, VW is a German Aktiengesellschaft headquartered in Wolfsburg; the state of Lower Saxony holds a blocking minority. Financially, Porsche SE is the majority shareholder, the free float is predominantly international, with BlackRock and Vanguard as the largest institutional shareholders. Operationally, the main value creation of the growing business area takes place in China, with local R&D, local suppliers, local platforms. Culturally, the corporate language is English, top management is of mixed nationality. Strategically, the corporation acts for its global shareholder base and its world market, in which Germany makes up a shrinking share.
III. Forerunners — what has already happened
VW is not the beginning. It is the latest and largest manifestation of a pattern that has been played through many times in recent decades. The forerunners show where the movement leads, because they have already arrived.
In the 1990s MAN licensed its printing-press technology to Chinese partners. Today China dominates the global printing-press market. Siemens contributed its high-speed train technology to joint ventures. Today the fastest train in the world runs in China. Siemens still builds trains for Deutsche Bahn at its plant in Krefeld, but the global high-speed train business no longer lies with Siemens. ThyssenKrupp gave its maglev technology to Shanghai — there it runs. In Germany, maglev technology stands in a museum.
In Zhanjiang in southern China, BASF is building the world's third-largest integrated chemical site for €8.7 billion — the largest single investment in the corporation's history. At the same time BASF is closing plants in Frankfurt and Knapsack, cutting 3,200 jobs in Ludwigshafen, launching savings programmes. This is not a change of strategy. It is the relocation of the substance to the other continent — with the legal shell fully preserved. BASF remains a German company. Its value creation does not.
In March 2026 Schaeffler entered into a strategic partnership with Leju Robotics in China. Four men at the table, all four Chinese, two of them on the payroll of a German corporation. Schaeffler brings in its complete toolbox — rolling bearings, screw drives, precision gearboxes, electric motors, sensors, thermal management, battery management, metalworking, 3D printing. Leju brings insights. The exchange ratio is grotesque and the consequence foreseeable: in three to five years Leju will be able to produce what Schaeffler can today, without needing Schaeffler.
DaimlerChrysler was the financial forerunner of the same pattern. The 1998 merger was meant to create a "world corporation". It ended in 2007 with the sale of Chrysler to a financial investor for $5.5 billion. More than €50 billion of shareholder wealth was destroyed in this construction. That was not an accident — it was an object lesson in how German corporate leaderships use their substance as a bargaining chip without understanding what it is being traded for.
In 2016 Bayer took over Monsanto for $63 billion — the largest German foreign acquisition of all time. Today Bayer's share price is below a quarter of its level at that time. The glyphosate lawsuits have cost the corporation more than $15 billion. The German money was not lost in the USA — it was lost in the expectation that German boardroom competence could manage global risks it does not understand.
IV. The illusions not yet abandoned
Why does it carry on like this? Why does a corporate leadership that knows the Schaeffler pattern not react differently when it finds itself in the very position Schaeffler has just been in? The answer lies in a series of illusions that have shaped the self-image of German corporations since the 1990s — and that have not yet been abandoned, although experience refuted them long ago.
The market religion. Strategic considerations are outdated, because the market itself does the selecting. Whoever intervenes distorts. Whoever plans errs. The market is always right. This position was formulated in the 1990s as the triumphant lesson of the end of the Cold War — and it was never revised, although China has been explicitly doing the opposite for twenty years. The Chinese industrial policy 引进消化吸收再创新 — introduce, digest, absorb, re-innovate — is an official doctrine that appears in every five-year plan. The German corporations do not read it. They sign.
The quality illusion. We are the nation of engineers. Our products are the best. In the end quality prevails. This illusion was coherent as long as quality was the decisive variable in a world of scarce competition. It has become false in a world in which Chinese competitors offer fifty or eighty per cent of the quality at fifty per cent of the price — and in which the speed of model cycles has become more important than the last ten per cent of quality advantage. Brandstätter says 2026 is a transition year and recovery will come in 2027 with the product offensive. That is the quality illusion in its purest form. It assumes that the world will wait twelve months for VW's next model generation.
The globalisation illusion. Globalisation is a law of nature, its rules are universal, its benefits flow to all who follow them. This illusion arose in the WTO world of the late 1990s. Today it is empirically refuted. The benefits flow to those who act strategically; the disadvantages flow to those who believe that a market free of the state will regulate distribution fairly.
The location illusion. Corporations are stateless, and that is a good thing. They seek out the best location, and politics can only keep them through competitive conditions. This illusion has two stages. In the first stage it frees corporations from loyalty to their home location. In the second stage it blames home politics when the corporations leave. Both stages operate simultaneously in the same discourse. Together they produce a configuration in which nobody is responsible any more.
The catching-up illusion. If only we become efficient enough, agile enough, digital enough, AI-supported enough, we will come back. This illusion is the last and most stubborn. It survives in every strategy presentation and every press release, long after the structural shifts have closed off the road to catching up. It is also politically functional: it allows politics to say that all will be well if only the reforms come fast enough. What it conceals is that the reforms that would be necessary do not take place, because the structures that prevent them are the same ones that created the problem.
V. The ten-year path
Where will the German corporations stand in 2036? The question is speculative, but it is not arbitrary. From the current state and the trend lines, a path can be drawn that is probable, not certain. Along this path the five layers shift unevenly.
Legally VW remains a German AG, BASF a German SE, Bayer a German AG. This layer does not change by itself. It can only be changed through political intervention or through takeovers. Both are possible, but not very probable within a ten-year horizon. The legal shell will therefore continue to exist.
Financially the shareholder structure will become further institutionalised and internationalised. Family holdings will be reduced further through inheritance and dilution. The share of German institutional shareholders — insurers, pension funds, the central institutions of the savings banks — will continue to fall, because German capital continues to be poorly invested, as the Schularick–Trebesch paper has documented. Whoever owns VW in ten years will, for the most part, not be based in Germany.
Operationally the shift will be most visible. The relocation of value creation already under way today will continue. The German sites will be cut back further, the foreign ones expanded further. At VW the China operation will no longer serve only the Chinese market, but other Asian markets as well, and possibly Africa. At BASF, Zhanjiang will overtake Ludwigshafen as the most important site — perhaps not in absolute size, but in growth dynamics and strategic significance. The German operations will become administrative sites with residual production.
Culturally everyday corporate life will become further internationalised. English is already the corporate language today; in ten years middle management too will be able to work without German. Top management will increasingly be recruited internationally, with an emphasis on the growth markets — that is, Chinese, Indian, Southeast Asian executives. In ten years the Wolfsburg headquarters may have a Chinese or Indian CEO.
Strategically the erosion will be deepest. Already today the corporations no longer act in the German interest when German and global interests collide. In ten years the question will no longer be asked, because the actors who could ask it will no longer sit in positions where it would have any effect. In ten years the corporations will be strategically globalised companies whose German address is a historical detail.
VI. The shell and its content
What remains in the end is the shell. The brand name. The address. The logo. The history. This layer is the cheapest to maintain and the last to fall — because it remains valuable even when the substance beneath it has changed. Volkswagen, as a word, is a brand that still sounds German, even if the car it denotes is built in Anting near Shanghai, developed in Hefei, with software from Hangzhou. That is not a German property of the car. It is a German memory of its origin.
There are historical precedents for this configuration that are rarely drawn on in Germany. Rolls-Royce as a brand has belonged to BMW for two decades. Bentley belongs to VW. Mini belongs to BMW. The English car brands have survived as word-shells, with different owners and different value chains. The English car industry as an industry has disappeared — what remains are the brand names, living on in the marketing departments of other corporations. That is one possibility, and it is no catastrophe for the brands. But it is something other than what they once were.
Another possibility is plain takeover. Krupp became part of ThyssenKrupp, which is itself in dissolution. AEG has disappeared. Telefunken has disappeared. Quelle has disappeared. Karstadt has disappeared. These are not marginal cases — these were corporations that shaped Germany's post-war industrial image. They did not survive because they had to operate in a world in which their substance no longer held. In ten years further names will be on this list. Exactly which cannot be predicted — but that there will be more can be.
What is particularly important about the diagnosis of the transition from the Megamachine to the Metamachine — as described in the sister paper — is this: these corporations are no longer individual actors that can fail or succeed. They are components in a web of several Megamachines that substitute for one another. When the German automotive industry shrinks as a sector, the Chinese one grows. When the German chemical industry moves away, the East Asian one grows. The substance is preserved — but not in German hands.
The question What is still German today? is the question of the depth of the shell. Today it still carries all five layers. In ten years it will probably carry only the legal and the symbolic one. What lies between them — the money, the value creation, the culture, the strategy — is migrating away right now.
VII. What the Megamachine cannot do
The question that remains open is not whether this movement will take place — it is taking place. The question is whether there is a position from which it could still be influenced. Here the preceding paper The Lights Go Out has already formulated the diagnosis precisely: the Megamachine can do many things — it can hand out subsidies, launch support programmes, hold summits on Germany as a business location, conduct debates on an industrial electricity price. But it cannot reverse the structural decisions that laid the path. And it cannot replace the actors who sit on the executive floors and make the decisions that drive the erosion.
These actors do not act maliciously. They act rationally within the optimisation conditions they find. A VW board that acts for its global shareholders optimises for global success, not for German location policy. A BASF board that acts for its growth markets builds where the market is growing. A Schaeffler board seeking to keep up with a new technology goes where the technology is. The sum of their actions is the erosion of German industrial substance — which nobody wants, which nobody consciously brings about, but which arises from the sum of individual rational decisions.
That is the emergent pathology named in the obsolescence paper. It cannot be remedied by appeals to the responsibility of individuals. It can only be changed by changing the optimisation conditions — and that change requires a political force that does not exist in Germany today and that cannot arise under the illusions not yet abandoned.
VIII. Concluding remark
Whoever wants to answer the question What is still German today? must name the five layers, examine the state of each and draw the trend lines that shift them. Today VW is still German in all five layers — most strongly in the legal one, most weakly in the operational and strategic ones. In ten years VW will probably be German in only two or three layers — the legal, the symbolic, possibly a residual layer of the shareholder structure. What lies between them will be located elsewhere.
This is not an indictment. It is a description. The actors bringing about this shift act rationally, courteously, competently. The corporate press releases are carefully worded. The press conferences are well prepared. The annual reports are audited. Nothing goes wrong in the sense that anyone breaks rules or neglects their duties. Everything takes its course. That is precisely the problem.
The shell will last longer than the substance. Whoever buys a car called Volkswagen in 2036 buys a product that carries the historical memory of a German people's car — and a car that has little to do with that memory. That is not the end of the brand. It is its transformation into a property that is no longer identical with the country in which it arose. What began as German will in ten years be remembered as historically German.
The open question this paper cannot answer is whether that matters. For the shareholders it does not matter, as long as the return is right. For the global markets it does not matter, as long as the products work. For German politics it matters in theory, but in practice there is no lever. For the employees at the German sites it matters existentially, but they have no voice that gets through. For the German public it matters symbolically — and symbolic importance is precisely the form of importance that changes nothing, but is merely administered.
That is the situation. It will not resolve itself over the next ten years. It will deepen until the shell is what remains — and what it enclosed lives on elsewhere, under other names, in other languages, with other owners.