Chinese auto manufacturer Geely made a surprise announcement on Friday, February 23, that it had acquired a 9% stake in Daimler, the parent company of Mercedes-Benz. The $9 billion stake makes Geely the company’s biggest shareholder, adding to what is a growing portfolio of investments by the Chinese company in European auto firms. These include full ownership of Sweden’s Volvo and British taxi manufacturer, the London Taxi Company.
German Economy Minister Brigitte Zypries expressed some concern, telling newspaper Handelsblatt that the government must “keep an especially watchful eye” and that, while Germany “is an open economy that welcomes investments as long they happen in line with the market,” this openness should “not be used as a gateway for other states’ industrial policy interests.”
There are already recent signs — even prior to this announcement — of Daimler coming under pressure from Beijing. The company’s Mercedes division posted an ad on the company’s Instagram page quoting the Dalai Lama that prompted a rebuke from Beijing. On February 6, Mercedes posted an apology on its Weibo page, declaring that “We will promptly take steps to deepen our understanding of Chinese culture and values, our international staff included, to help standardize our actions to ensure this sort of issue doesn’t happen again.” This anecdote is now being used as an example of China’s ability to effect corporate behavior and politics.
Perhaps more pressing in the eyes of Minister Zypries, per her comments, is the synergy between the Geely-Daimler deal and China’s industrial policy. Geely Chairman Li Shufu said his company wanted to “accompany Daimler on its way to becoming the world’s electro-mobility provider.” This accords with an intensifying push in Beijing to boost China’s domestic electric vehicle sector. One target is for 20% of cars sold by 2025 to be electric or hybrid. There is a risk that Daimler could be pressured by its new shareholder to hand over relevant technology in exchange for the investment.