Wang, who had been fascinated by cars growing up, originally wanted to study vehicle engineering in Germany. But his German-language skills weren’t good enough to pass the exam that would qualify him as a student. Hungary’s booming auto industry made it an easy second choice. 

Since Wang arrived in Hungary, many more of BYD’s peers have followed in its footsteps. As Chinese EV companies go global — expanding to new markets across the world, from Jordan to India to Mexico — Hungary has emerged as a popular destination, particularly for China’s EV battery and component manufacturers. They are drawn to Hungary’s access to European automakers, government subsidies for the auto industry, and its favorable relations with China. 

In the last year, Chinese battery and component manufacturers have announced more than 10 billion euros ($10.9 billion) worth of investments in Hungarian factories. In August last year, the world’s leading battery producer, Contemporary Amperex Technology Co. Limited (CATL), announced a 7.34 billion-euro investment to build a battery plant in east Hungary. Eve Energy, Huayou Cobalt, BYD, and Ningbo Zhenyu Technology have all announced new factory projects over the last few months. 

Hungary’s appeal for Chinese battery giants lies in its developed automotive industry and favorable business environment for Chinese firms, Lei Xing, an independent auto industry analyst, told Rest of World. Home to more than 700 auto and component manufacturers, Hungary is the only European country other than Germany where manufacturers Audi, BMW, and Mercedes-Benz all produce cars. Korean battery makers like SK Innovation and Samsung SDI have also expanded to Hungary in the last decade.

Chinese firms benefit from favorable government policies, such as subsidies for the auto industry. Hungary provided a cash grant to Chinese EV company Nio to cover 30% of an investment in a factory last year, and is paying 10% of the costs for a BYD battery-assembly plant announced in June. Hungary is also pursuing an “industrial park” strategy by inviting investment from EV companies across the battery supply chain into concentrated areas like Debrecen, said Evan Hartley, senior analyst at research firm Benchmark Mineral Intelligence.

Chinese investments in the country have also been encouraged by strong bilateral relations. In 2010, Hungarian Prime Minister Viktor Orbán unveiled an “Eastern Opening” strategy to promote trade and investment with Asia, particularly China. As a result, China has become Hungary’s top source of foreign investment this year, according to Hungary’s minister of foreign affairs, Péter Szijjártó. 

In June this year, Hungary was the “guest of honor” at the World Power Battery Conference in Yibin, China. 

Hungary is also home to the largest Chinese community in central Europe. Several Chinese expats told Rest of World they approved of China’s investments in the country’s EV sector. Wang Mei, a 53-year-old restaurant owner who immigrated to Hungary with her husband in 1994, said the development was proof of strong relations between the two countries. “When China invests more here, of course I’m proud and happy,” she said. “Orbán’s government, especially since the pandemic, has cooperated a lot with China.”

Yang Can, a 23-year-old college student from Xi’an who moved to Budapest as an exchange student, told Rest of World she had found Hungarian students to be friendly towards China. News coverage of China-Hungary relations also always appeared positive, she said. 

Local Hungarians, however, have been less enthusiastic about Chinese investments in the EV sector. The new EV plants have raised environmental and economic concerns, amid growing distrust of China in the region. 

Although the media suggests Hungary is the most China-friendly country in the EU, most Hungarians are not pro-China, Richard Turcsányi, an assistant professor at Palacký University Olomouc in the Czech Republic who studies Chinese foreign policy, told Rest of World. According to a public opinion study he conducted in 2020, even among conservative supporters satisfied with Viktor Orbán’s government, more respondents felt negatively towards China than positively. 

News of plant construction has also sparked protests in Debrecen over the factories’ water use, energy demands, and potential pollution. Hungary’s Green Party has attempted to halt the construction of new plants through a referendum. According to a national telephone survey conducted in February, half the Hungarian population thinks new battery factory construction should be banned outright because it endangers the environment. 

Sándor Molnár, a resident of Esztergom in northern Hungary, expressed concerns about water, air, and noise pollution produced by the plants. Water was already scarce due to a drought last summer, and new factories would only exacerbate the problem, he told Rest of World. New plants like the CATL facility can consume tens of thousands of cubic meters of water per day.

Molnár described himself as being “100%” against the factories. He also said that using foreign workers to make up for a labor shortage in Hungary might put more strain on resources in communities that live near the new factories.

A Hungarian operator for the Foxconn plant in Komárom told Rest of World she was excited about news of continuing battery investments. The 23-year-old, who requested to remain anonymous for fear of being identified by her employer, said she believed they offered new job opportunities for locals. A former restaurant worker, she joined Foxconn earlier this year, and now makes 15,000 forints (about $41.50) per day for a seven-hour shift.

But Turcsányi, the professor, said that many Hungarians don’t believe these new jobs will actually help the economy, given Hungary’s low unemployment rate (3.9% in July) and severe inflation. “People are not desperate to get any job,” Turcsányi said. “Such massive investment may actually create more problems for them, and Hungary may not have enough workers to work in these factories.”

Hungary’s workforce largely lacks the specialized skills required for battery manufacturing, and will need to temporarily import that skilled labor from elsewhere, said Hartley, the analyst at Benchmark Mineral Intelligence. 

Despite local pushback, Chinese battery manufacturers are continuing to make plans in the country. In July, Sunwoda announced a plant in Hungary with an initial investment of 245 million euros ($266 million).

“If you’re looking to expand to the European market, you especially want to be close to the automakers, the end market — the last step of the supply chain,” said Hartley. And Hungary, with cheaper labor and energy, is easier to access than Germany.

Wang, the student from Shandong, had a similar view of his move to Hungary. In January, he graduated from Széchenyi István University — where he also took German classes — and is temporarily working at a Chinese restaurant in Budapest as he plans his next move: an auto engineering graduate program in Berlin or Munich. “For me, Hungary is a springboard,” he said.