Daimler Angles for Control of China Venture
Daimler is quietly trying to take majority control of its carmaking operations in China. At the same time, its partner there hopes to buy a large stake in the German company.
Both maneuvers represent a struggle for greater control over billions of dollars in profits being generated in China by the sale of Daimler’s popular Mercedes-Benz luxury cars.
Daimler isn’t talking about its plan. But sources tell Reuters the carmaker is keen to hike its ownership of a venture with China’s BAIC Group—called Beijing Benz Automotive—to 75% from the current 49%. A similar effort in 2018 to gain a majority share fizzled.
Reuters’ sources say a faction within BAIC is in no rush to give up control over the venture and the lucrative source of profits it provides. Those funds are helping BAIC support its own carmaking activities, Reuters says.
Meanwhile, BAIC is angling to acquire 10% of Daimler. That would surpass the 9.7% stake held by China rival Zhejiang Geely Holding. More important, the holdings would give the two Chinese carmakers enough combined clout to block major Daimler board decisions, according to Reuters.
Quid Pro Quo?
China is beginning to slowly lift rules that have blocked foreign companies from owning more than 50% of any carmaking venture in the country. The new policy applies first to businesses that make electric cars. The big EV factory Tesla opened last month in Shanghai is the first such wholly owned foreign auto plant in China.
Daimler rival BMW plans to buy a 75% stake in its venture with Brilliance China Automotive in 2022. That’s the year when China’s new rules will allow foreign control over conventional carmaking operations.
Daimler wants to do the same. But last week Ken Wu, China’s ambassador to Germany, suggested permission won’t come until Germany drops its ban on Chinese telecom giant Huawei’s plan to introduce high-speed 5G cellular technology.
The U.S. has accused Huawei of selling equipment that can be used as spying tools by the Chinese government. Huawei vehemently denies such claims.
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