Question: But I’ve heard that Volkswagon is the majority shareholder of Gotion, isn’t this true?

Gotion appears to be playing a “shell game”.  Their shareholder meeting minutes from January, 2023, references a “shareholder agreement” forged with Volkswagon in May of 2020, and indicates that at the end of 36 months (May, 2023), the number of voting shares for Volkswagon would revert to being at least 5% less than those of the founding shareholders, who are Communist Party members. It appears this was done to create the temporary appearance that Volkswagon was a majority shareholder for a 3 year period.  When asked about this at a Green Township board meeting, Gotion VP Chuck Thelen commented that these details are “confidential”.  The minutes have also been since scrubbed from their website (see picture at bottom).

Understanding Gotion’s Shareholding Structure:

• Temporary Majority Shareholding by Volkswagen: According to Gotion’s shareholder meeting minutes from January 2023, there was a shareholder agreement with Volkswagen made in May 2020. This agreement appears to have been structured such that Volkswagen held a temporary majority of voting shares for a period of 36 months, ending in May 2023. After this period, the number of voting shares held by Volkswagen was to be reduced to at least 5% less than those held by the founding shareholders.
• Founding Shareholders’ Allegiance: The founding shareholders of Gotion are identified as members of the Chinese Communist Party (CCP), suggesting a strong influence of the CCP in the company’s governance structure.

Volkswagen’s Role and the ‘Shell Game’:

• Volkswagen’s Shareholding in Gotion: While Volkswagen appears to have been a significant shareholder in Gotion, this does not necessarily equate to control or governance over the company, especially considering the structure of the shareholder agreement.
• Volkswagen in China: It’s important to recognize that Volkswagen, like many foreign companies operating in China, does so through a joint venture. Volkswagen Group China is involved in multiple joint ventures and is subject to Chinese business laws and regulations, which often require foreign companies to partner with local firms and can involve significant local government or CCP influence.

The Nature of Foreign Businesses in China:

• Partnership Requirements: In China, foreign companies often have to form joint ventures with Chinese companies and are subject to Chinese laws, including those that mandate CCP influence within companies. This means that even though a company like Volkswagen may be a major shareholder, the local entity (Volkswagen Group China) operates within the framework of Chinese regulations and CCP influence.
• Distinguishing Between Volkswagen Group and Volkswagen Group China: There is a distinction between the Volkswagen Group based in Germany and Volkswagen Group China. The latter operates under Chinese laws and may have different operational and governance standards due to its location and partnership structure.

Conclusion: In summary, while Volkswagen has been a significant shareholder in Gotion, the nature of this shareholding and Volkswagen’s operations in China should be carefully considered. The temporary majority shareholding arrangement, as well as the obligations for foreign companies in China to align with local laws and potentially with CCP directives, suggest a complex and potentially misleading situation. This complexity is further compounded by Gotion’s removal of these details from their website and the alleged confidentiality claimed by Chuck Thelen regarding these arrangements. These factors all contribute to the perception that Gotion’s governance and ownership structure may not be as straightforward as presented, especially considering the influence of the CCP among its founding shareholders.