Li Shufu's Track Record in Sweden Eases Daimler Workers' Minds
Li Shufu's Track Record in Sweden Eases Daimler Workers' Minds
(Bloomberg) -- Li Shufu’s $9 billion investment in Daimler AG raised hackles in German government halls and executive suites. Not so at the offices of Michael Brecht, the powerful head of the automaker’s works council.
That’s because Brecht, during months of speculation that preceded the purchase, had been doing his homework on Li, who’s owned Volvo Car AB since 2010. Regular conversations with unions in Sweden revealed that employees there -- no pushovers when it comes to defending their rights -- were content working for the Chinese tycoon.
Li, the 54-year-old founder of Zhejiang Geely Holding Group Co., became Daimler’s biggest investor with an almost 10 percent stake as of Friday. He built a reputation for being hands-off and cooperative during Volvo’s return to growth, providing some $11 billion in investment and leaving company managers to make their own decisions.
Daimler’s works council had “close contacts” with their counterparts at Volvo Cars, and feedback about working with Geely has been positive, Brecht told reporters at a Feb. 6 meeting, when he was asked about the speculation of a Chinese investment in Germany.
Daimler stock rose as much as 0.9 percent and was trading up 0.7 percent at 70.69 euros as of 10:34 a.m. in Frankfurt, reversing a drop Monday that followed the stake announcement.
Powerful Workers
Keeping workers on one’s side is crucial in Germany, where employee representatives make up half the supervisory board at major companies. Brecht remains open-minded about working with the new lead investor, a person familiar with his thinking said. Initial reactions among employees didn’t point to much concern over Li’s involvement, the person said.
Volvo’s success in recent years would support the workforce’s satisfaction with their company’s new owner. The Swedish carmaker, the only major one left after Saab Automobile folded a few years ago, has enjoyed a renaissance under Geely, upgrading its line-up with new versions of its popular XC90 and XC60 SUVs and a new V90 hatchback that’s made the brand a viable competitor to the likes of BMW and, for that matter, Daimler’s Mercedes-Benz.
So far, Germany’s government hasn’t put up any official warning signs about China’s biggest push into the economy, Europe’s largest. The purchase was a “corporate decision” and below the threshold of a 25 percent stake where foreign-investment rules might apply, German deputy government spokeswoman Ulrike Demmer said.
‘Misplaced’ Fears
Fears about Chinese interference are misplaced, Sanford C. Bernstein analyst Max Warburton said in a note. Geely’s hands-off approach is set to continue at Daimler, where Li, or a representative, will probably seek a board seat, Warburton said.
Getting one isn’t assured. Not only does Volvo Cars compete with Mercedes, Geely agreed in December to buy the largest stake at Volvo AB, the second-biggest truck manufacturer after Daimler and the Swedish auto marque’s former owner. While Volvo AB Chairman Carl-Henric Svanberg told Svenska Dagbladet newspaper that he and Li agree on the truckmaker’s strategy, its nominating committee dropped the head of Volvo Cars from the board, citing the Daimler stake as a possible conflict.
Under German law, Geely can theoretically seek to join Daimler’s board as early as the annual meeting on April 4. While there’s no legal right to board representation, companies tend to grant shareholders’ wishes.
“It’s also a political question whether you can shut the door in someone’s face like this,” said Gregor Bachmann, law professor at Humboldt University in Berlin. “Usually, sooner or later you accommodate such a wish and grant a seat. It’s pretty difficult to say no here.”
--With assistance from Karin Matussek
To contact the reporter on this story: Elisabeth Behrmann in Munich at ebehrmann1@bloomberg.net.
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Benedikt Kammel
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