Daimler major shareholder Geely urges cooperation: Li Shufu has bad cards for new Daimler alliances

04/16/2018

Daimler giant shareholder Geely urges cooperation Li Shufu has bad cards for new Daimler alliances

REUTERS

Li Shufu, founder and head of Chinese auto giant Geely

Forge new partnerships, build digital platforms: The wishes are not revolutionary, the new major Daimler shareholder Li Shufu in the direction of the Stuttgart expresses, Unusually, however, is the form in which the founder and Chief of the Chinese automaker Geely to the Stuttgarter applies – by guest contribution in the Frankfurter Allgemeine Zeitung.

Shufu would have it too Daimler’s general meeting ten days ago for a great performance. After all, Shufu has held 9.7 percent of Daimler’s ordinary shares since the end of February, making it the largest single shareholder. However, Shufu stayed away from the Daimler shareholder meeting in Berlin. Instead, he now puts pressure in writing.

One must “actively explore the possibility of extensive alliances,” instead of withdrawing from reality, says Shufu. It must be possible to use economies of scale while maintaining the independence of brands and management. As long as this is legally sound, “any bilateral and multilateral cooperation can and should be discussed for mutual benefit.” Geely is said to be particularly interested in collaborating on electric cars and autonomous driving, reports said.

But that’s where it could be difficult for the Geely boss. Daimler CEO Dieter Zetsche reported very positive first talks with Shufu at the AGM. At the same time, however, Zetsche also stated: “In China, we are open to everything that is in harmony with the interests of our long-time partner BAIC”.

BAIC is likely to have little interest in opening up towards Geely

Beijing Automotive Industry Holding, as BAIC is known by its full name, is connected to Daimler on several levels. Their car subsidiary BAIC Motor operates a joint venture with Daimler, which manufactures Mercedes models in China. Daimler acquired 12 percent of BAIC Motor five years ago. Shortly after Geely’s entry at Daimler, the Stuttgart have also declared, together with BAIC 1.9 billion euros to invest in a new plant, Daimler and BAIC are also working together in the truck sector: In a joint venture, Foton and Daimler are producing lorries for the Chinese market, which are being sold under the Auman brand.

Recently, Daimler also has a share of 3.9 percent acquired at the BAIC subsidiary Beijing Electric Vehicle, According to reports, Daimler has agreed with BAIC on a far-reaching cooperation in the electric car brand EQ, with which Stuttgart wants to launch next year.

However, BAIC does not necessarily need jump-starting for electric vehicles in its home country. After all, BAIC’s EC-series compact electric cars were China’s best-selling electric car model. In the Chinese electric car market, BAIC is currently number two with a market share of 18.8 percent. BAIC’s interest in cooperating with the direct – and in electric cars significantly smaller – competitor Geely should not be too great.

Especially since there is another difference: BAIC belongs to the city government of Beijing and is thus a state-controlled carmaker. Geely is a private company built by Li Shufu. Although the Chinese state may well have at least sympathetically accompanied Geely’s foreign expansion. But China’s state-owned companies often look rather contemptuously at their private competitors – and vice versa.

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