On Tuesday Beijing Automotive Group Co Ltd.
indicated that it had acquired 5% stake in Daimler
(OTCMKTS:DMLRY)
which further cements the relationship between China and
the German automotive company following the emergence of Geely Holdings a
competitor.

Beijing
Automotive acquires 5% stake in Daimler

With the 5% stock acquisition Beijing
Automotive Group will also have voting rights equal to the stake. For a while
the companies have been partners in China in Daimler’s move of establishing
joint ventures to produce cars. However in 2018 a new player entered the matrix
when Geely Holdings’ Chairman Li Shufu acquired a 9.69% stake in Daimler with
the goal of collaborating with the company to manufacture self-driving and
electric cars.

With the acquisition Beijing Automotive
Group Chairman Heyi Xu indicated that the move reinforces the company’s
alignments as well as its relentless support for the German carmaker’s management
and strategy.

The move will however raise concerns in
German regarding the growing influence of China in its industrial sector. In
recent years there has been increased acquisition of German companies by
Chinese companies and the most notable is Kuka which is a maker of industrial
robots.

Chinese
market vital for success of Daimler

With cost of making electric car batteries
being high most carmakers have found it hard to build cheap zero-emission cars
and as a result most of them have looked at collaborating with Chinese
companies to realize the dream. China on its end is looking to grow its
production of electric cars as a way of limiting its dependence on imported
fossil fuels.

In March this year Daimler agreed to work
together with Hangzhou based Geely in developing the next generation
Smart-branded cars. China is seen as a force in the development of electric
cars since Chinese companies dominate in the production of electronic and
electric equipment although they are still lagging behind when it comes to
technology related with internal combustion engine.

Regarding the investment Dailmer’s CEO Ola
Kallenius indicated that the Chinese market is very vital to the company’s
success not only in terms of sales but also in terms of product development and
production.