Li Shufu, Geely's founder and main owner, revealed on Friday he had built up a 9.7% stake in Daimler, the owner of the Mercedes-Benz brand, without having previously disclosed that he had crossed regulatory thresholds of 3% and 5%. He's aware of the ongoing debate in Germany about Chinese investments and wants to reassure German officials that, as with his investment in Volvo Cars in Sweden, he'll respect labor laws and won't intervene too heavily in management decisions. Although under German law, the government can only intervene if a threshold of 25 percent is exceeded, investors must abide by market rules, Zypries said in interviews with Daimler's home-town newspaper Stuttgarter Zeitung and Handelsblatt newspaper.
Daimler's head for China, Hubertus Troska, the deepening cooperation between Daimler and BAIC means that the Beijing Benz Automotive Co (BBAC) will continually play a critical role for Mercedes-Benz in the country. Geely also holds a 8.2 percent share in AB Volvo.
The move is part of an aggressive expansion by Geely, which shot to prominence in Europe after acquiring Volvo in 2010 from Ford and went on to buy The London Taxi Company in 2012.
Daimler made an easy target for cash-flush Geely.
The car industry is witnessing what Bloomberg calls one of its biggest disruptions since Benz assembled the first automobile more than a century ago.
Geely chairman Li Shufu buys a significant chunk of shares from Daimler. This plant will make new Mercedes-Benz cars to meet the rapidly growing demand for the vehicle. He added that the company was reorganising its battery development business and so was taking on 300 staff from its Accumotive unit. Last week, China's government temporarily took over Anbang Insurance Group Co, whose buying binge including properties such as Manhattan's Waldorf Astoria hotel has come to symbolize the overreach of the nation's debt-laden conglomerates. The German automaker said it "knows and appreciates Li Shufu as an especially knowledgeable Chinese entrepreneur" with a "clear vision for the future", with whom the company could constructively discuss change in the industry.
The companies will use smart manufacturing and increased digitalization to accelerate production upgrade in China.
China last year was once again Mercedes-Benz's largest single market, with local production of around 430,000 units accounting for over 70% of total local sales.