Chasing Global Sway, China’s Car Industry Influence Rises
China has long been a key market for global automotive manufacturers. Now it’s asserting its role as an investor in the industry.
(Bloomberg) -- China has long been a key market for global automotive manufacturers. Now the country is asserting its role as an investor in the industry, stepping up the pace of purchases in the car and heavy-truck sector.
The latest foray: state-backed Beijing Automotive Group Co. is buying a 5% stake in Daimler AG, the maker of Mercedes-Benz. The announcement caps an increasingly active period for deals -- of the major transactions where a Chinese company bought a stake in a non-Chinese automotive firm since 2008, more than half occurred in the past two years, according to data compiled by Bloomberg.
Billionaire Li Shufu’s Zhejiang Geely Holding Group Co. was a pioneer, buying Volvo Cars from Ford Motor Co. in 2010. After that, it took almost four years until another Chinese firm again considered the sector, when Dongfeng Motor Corp. participated in a capital increase of Peugeot SA and received a stake of about 14% in return.
The single biggest investment in the category is Geely’s stake in Daimler, which it bought for $9 billion in Feb. 2018, gaining about 9.7% of the company and making it the single biggest shareholder in the German luxury-car company.
| Date | Acquirer | Target | Size |
|---|---|---|---|
| 2019 | Beijing Automotive Group | Daimler | $2.8b |
| 2019 | Ningbo Jifeng Auto Parts | Grammer | $888m |
| 2018 | Zhejiang Geely Holding Group | Daimler | $9b |
| 2017 | Zhejiang Geely Holding Group | Volvo Group | $3.7b |
| 2017 | Zhejiang Geely Holding Group | Proton Holdings, Lotus Cars | $40m |
| 2017 | Tencent Holdings | Tesla | $1.8b |
| 2016 | Ningbo Joyson Electronic | Key Safety Systems (Takata) | $1.6b |
| 2015 | China National Chemical | Pirelli | $7.1b |
| 2014 | Dongfeng Group | Peugeot | $720m |
| 2010 | Zhejiang Geely Holding Group | Volvo Cars | $1.8b |
The purchase by BAIC makes it the third-largest shareholder of Daimler and represents the biggest strategic investment by a Chinese government entity into a global carmaker. The German company also owns a big chunk of the Chinese partner’s Hong Kong-listed unit.
“Two Chinese companies having interest in the same foreign automaker shows that Chinese companies are interested in investing in strong foreign brands,” said Rachel Miu, a Hong Kong-based analyst at DBS Group Holdings Ltd. in Hong Kong. Though the China-U.S. trade war is making it hard for firms to do so, Chinese companies aren’t going to give up on their plans to globalize, she said.
The Daimler investment paves the way for one of China’s industrial champions to get better access to high-end automotive technology at a time when China’s own auto market, the world’s largest, is weathering through a year-long slump. That’s giving local companies more incentive to look elsewhere for growth, even though Europe and the U.S. are also experiencing slowdowns of their own auto markets.
Closer ties between Daimler and BAIC, China’s biggest producers of electric cars, may also allow the firms to pool resources as the industry shifts toward electrified and self-driving vehicles. Electric-car entrants such as Tesla Inc. and China’s NIO Inc. represent a threat to traditional automakers, while technology companies including Baidu Inc., Tencent Holding Ltd. and Alphabet Inc.’s Waymo are making a push into autonomous vehicles.
“The deal improves the ties between BAIC Group and Daimler,” said Toliver Ma, an analyst at Guotai Junan International Holdings Ltd. in Hong Kong. “We expect more strategic cooperation between the two companies.”
Affiliation with Western brands gives Chinese companies potential credibility as they seek to win over consumers in Europe and the U.S. down the road. Geely is working with Volvo Cars to improve its product lineup and move to higher-end models, and the Chinese company also formed a joint venture with Daimler to transform the German partner’s diminutive Smart into an all-electric brand based in China.
Besides Geely, Chinese carmakers including Guangzhou Automobile Group Co., Great Wall Motor Co. and Zotye Automobile Co. have expressed interest to start selling in the West. While Chinese companies have exhibited in auto shows in Europe and the U.S. and set up local sales units and research-and-development operations, few have actually begun sales.
To contact the reporters on this story: Oliver Sachgau in Munich at osachgau@bloomberg.net;Jinshan Hong in Hong Kong at jhong214@bloomberg.net
To contact the editors responsible for this story: Elisabeth Behrmann at ebehrmann1@bloomberg.net, Benedikt Kammel, Ville Heiskanen
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