Chinese multinational automotive manufacturer Geely is combatting rumors the company used funds from domestic state-owned enterprises to acquire a major stake in German automotive firm Daimler AG, reported.
Germany says it will remain "watchful" of Chinese carmaker Geely after it became the biggest investor in Mercedes-Benz owner Daimler. The move poses a challenge to Daimler, which as well as its Chinese partnership with BAIC Motor Corp. has an industrial alliance to develop cars and trucks with Renault-Nissan, which owns a 3.1% stake in Daimler. "Daimler has already rejected Geely's overtures once, and Daimler execs we spoke with argue it's simply not clear what Geely could offer Mercedes", Bernstein Research analyst Robin Zhu said in a note.
But BAIC Motor warned the same day that its own net profit for the period likely dropped about 65% from the 6.36 billion yuan of 2016.
Though in some Chinese overseas projects investment risks are indeed underestimated, yet the bigger picture is that most of the Chinese investors are rational enough to conduct business with their foreign partners in a mutually beneficial way with a long-term view. Today there are over 850 local engineers working in the hub.
Li Shufu is keen on global expansion as they also bought a 49.9 percent share of Lotus under Geely.
BAIC Group chairman Xu Heyi said: "With over a decade of remarkable achievements, BBAC stands as evidence of the strong collaboration between BAIC and Daimler". In China, these vehicles are dubbed NEVs, or New Energy Vehicles.
A Daimler spokesman said the company regularly meets with investors, declining to comment on specific meetings. As part of this new 1.5 million euro investment, a production facility currently operated solely by BAIC in Beijing's Shunyi district will be transferred to BBAC and modified to produce premium Mercedes-Benz models. But the 54-year-old has also introduced an unexpected plot twist to the story of German engineering prowess epitomized by Daimler itself. Stealth raidGeely responded to the rejection in November by enlisting Dirk Notheis, the former Chief Executive of Morgan Stanley in Germany and Yi Bao, a former CEO of Morgan Stanley Huaxin Securities, sources familiar with the matter told Reuters. The purpose of the transaction was the attempt of the Chinese company to access technologies in the field of electromobility. Employing over 11,000 staff, the Daimler and BAIC venture builds C-Class, E-Class, GLA, and GLC vehicles. The company said that local production was one of the pillars of their commitment to sustainable development in the country.
He is banking on Daimler to help Geely become a leading player in electric and autonomous cars.
Daimler's Feb. 13 earnings release for 2017 showed that the Chinese joint venture's revenue grew 32% to 15.37 billion euros ($18.9 billion), while profit from continuing operations after taxes jumped 62% to 2.35 billion euros.