chonkoa
Aerodynamic Artisan
I don't think they are a continuation of the state, they are part of the state.
All global Chinese companies are extension of the communist state.
All global Chinese companies are extension of the communist state.
Wolfgang
Kraftwagen König
Q&A WITH GEELY'S LI SHUFU
Daimler deal driven by brand cachet vs. common ground
March 9, 2018 @ 6:30 am Bloomberg News
Li Shufu: "Many people around the world have put money into Daimler. Why shouldn't we? Why should this be surprising?" Photo credit: Bloomberg
BEIJING -- Zhejiang Geely Holding Group Co. Chairman and founder Li Shufu made history last month when he became Daimler AG’s top shareholder, a move he says is driven more by the cachet of Germany’s storied auto brand and the outlook for autonomous driving and electric cars, rather than shared business prospects. Here is an explainer -- in his own words -- of what’s behind the investment, valued at 7 billion euros ($8.6 billion).
The 54-year-old made the comments during a brief interview this week on the sidelines of legislative meetings being held in Beijing and also through written responses to questions submitted by Bloomberg News. The following is a translation of those comments, which were originally made in Chinese.
Why did Geely invest in Daimler?
In my view, Daimler is the most promising among all traditional auto companies. Their vision is the most strategic and their management is exceptional. Daimler is the forefather of the automobile industry, an inventor, and has a very high level of social responsibility, compliance and management transparency. We should hold such a company in high regard.
The return on investment from the company is also very generous. It gives out much higher dividends compared with bank interest. The company is a very strong publicly traded company and an ideal investment target. Therefore we invested in it.
How do we generate synergies with them going forward? That will depend on whether they have such a desire. If they do, we’ll collaborate with them. If they don’t, then we won’t. Collaboration is not the only issue and is not a precondition.
You have to understand this. Why do people think we shouldn’t make an investment if there are no synergies? Why shouldn’t we? Many people around the world have put money into Daimler. Why shouldn’t we? Why should this be surprising?
This is purely a business decision. There’s no political background, no specific national factors. This is strictly a business decision. Currently we don’t have any plans to invest more. Who knows what the future brings? For now, we have no plans to make additional investments.
(The following are written responses to questions from Bloomberg News.)
What areas is Geely looking to increase investments in?
The evolution and rapid growth of Geely in the past three decades are intertwined with China’s opening-up reform and its economic development. What’s special about the automotive industry is that it must stand up to global competition. Cross-boarder M&As offer the most efficient way to help Chinese companies transform and upgrade themselves to become global enterprises. Geely’s growth and dream to become global is linked to our actions to step out of the country and expand overseas. We will further consolidate the global resources under the group to expand our product portfolio and improve technology and r&d to make the group more mature and diversified.
Your biggest challenge? The biggest risk for this investment?
Change is a constant. I like challenges. I am interested in every cutting-edge technology in the auto industry, be it autonomous driving or flying cars. Geely acquired Terrafugia to bring the dream of flying cars into reality. Volvo and Uber have also been developing self-driving cars together in the past two years.
The global auto industry in the 21st century has a big opportunity for innovation but it also faces challenges from companies outside our industry. It will be very difficult for carmakers to win the war if they go it alone. We must refresh our mindset and seize the opportunity by forming alliances with friends to help us reach commanding height in technology through synergies and sharing.
Meanwhile, Daimler is an excellent company with an exceptional team of managers. For Geely, investing in Daimler is an investment opportunity of extreme value.
Any deal has its potential risks. What we hope to see is that as Chinese companies go out of the country, they can leverage the domestic and international markets to consolidate global resources for joint development. My focus is on how Geely continues to develop its own strengths in a better way from a new starting point to become a global enterprise rooted in China and facing the world, so as to help China’s auto industry move up the value chain in the world.
What will Geely look like in 20 years?
We will strive to develop digital technology and continue to promote the formation of online capabilities. The future car is a highly intelligent wheeled robot in the mobile space, and all our efforts are preparing for the day to come.
Why overseas M&A?
In order to adapt to the trend of economic globalization and to achieve the goal of becoming a global group, we have been exploring our own path of global development. The experience that we have gained from overseas mergers and acquisitions has changed the model that Chinese companies are used to, which is the use of capital in exchange for technologies. Instead we have come up with the new way of using technologies and capital in exchange for markets.
Daimler deal driven by brand cachet vs. common ground
Daimler deal driven by brand cachet vs. common ground
March 9, 2018 @ 6:30 am Bloomberg News
Li Shufu: "Many people around the world have put money into Daimler. Why shouldn't we? Why should this be surprising?" Photo credit: Bloomberg
BEIJING -- Zhejiang Geely Holding Group Co. Chairman and founder Li Shufu made history last month when he became Daimler AG’s top shareholder, a move he says is driven more by the cachet of Germany’s storied auto brand and the outlook for autonomous driving and electric cars, rather than shared business prospects. Here is an explainer -- in his own words -- of what’s behind the investment, valued at 7 billion euros ($8.6 billion).
The 54-year-old made the comments during a brief interview this week on the sidelines of legislative meetings being held in Beijing and also through written responses to questions submitted by Bloomberg News. The following is a translation of those comments, which were originally made in Chinese.
Why did Geely invest in Daimler?
In my view, Daimler is the most promising among all traditional auto companies. Their vision is the most strategic and their management is exceptional. Daimler is the forefather of the automobile industry, an inventor, and has a very high level of social responsibility, compliance and management transparency. We should hold such a company in high regard.
The return on investment from the company is also very generous. It gives out much higher dividends compared with bank interest. The company is a very strong publicly traded company and an ideal investment target. Therefore we invested in it.
How do we generate synergies with them going forward? That will depend on whether they have such a desire. If they do, we’ll collaborate with them. If they don’t, then we won’t. Collaboration is not the only issue and is not a precondition.
You have to understand this. Why do people think we shouldn’t make an investment if there are no synergies? Why shouldn’t we? Many people around the world have put money into Daimler. Why shouldn’t we? Why should this be surprising?
This is purely a business decision. There’s no political background, no specific national factors. This is strictly a business decision. Currently we don’t have any plans to invest more. Who knows what the future brings? For now, we have no plans to make additional investments.
(The following are written responses to questions from Bloomberg News.)
What areas is Geely looking to increase investments in?
The evolution and rapid growth of Geely in the past three decades are intertwined with China’s opening-up reform and its economic development. What’s special about the automotive industry is that it must stand up to global competition. Cross-boarder M&As offer the most efficient way to help Chinese companies transform and upgrade themselves to become global enterprises. Geely’s growth and dream to become global is linked to our actions to step out of the country and expand overseas. We will further consolidate the global resources under the group to expand our product portfolio and improve technology and r&d to make the group more mature and diversified.
Your biggest challenge? The biggest risk for this investment?
Change is a constant. I like challenges. I am interested in every cutting-edge technology in the auto industry, be it autonomous driving or flying cars. Geely acquired Terrafugia to bring the dream of flying cars into reality. Volvo and Uber have also been developing self-driving cars together in the past two years.
The global auto industry in the 21st century has a big opportunity for innovation but it also faces challenges from companies outside our industry. It will be very difficult for carmakers to win the war if they go it alone. We must refresh our mindset and seize the opportunity by forming alliances with friends to help us reach commanding height in technology through synergies and sharing.
Meanwhile, Daimler is an excellent company with an exceptional team of managers. For Geely, investing in Daimler is an investment opportunity of extreme value.
Any deal has its potential risks. What we hope to see is that as Chinese companies go out of the country, they can leverage the domestic and international markets to consolidate global resources for joint development. My focus is on how Geely continues to develop its own strengths in a better way from a new starting point to become a global enterprise rooted in China and facing the world, so as to help China’s auto industry move up the value chain in the world.
What will Geely look like in 20 years?
We will strive to develop digital technology and continue to promote the formation of online capabilities. The future car is a highly intelligent wheeled robot in the mobile space, and all our efforts are preparing for the day to come.
Why overseas M&A?
In order to adapt to the trend of economic globalization and to achieve the goal of becoming a global group, we have been exploring our own path of global development. The experience that we have gained from overseas mergers and acquisitions has changed the model that Chinese companies are used to, which is the use of capital in exchange for technologies. Instead we have come up with the new way of using technologies and capital in exchange for markets.
Daimler deal driven by brand cachet vs. common ground
Centurion
Apex Apex Predator
While there is overlap between the A3/Golf and A4/Passat, the hierarchy in the more premium models is more apparent. VW sits below Audi with no models to cannibalise the A6, Q7, TT, A8, R8 or A7.
Volvo on the other hand go head to head with Mercedes on pricing, design and even luxurious options like nappa leather, air suspension and autonomous features. SUVs are currently Volvo's strongest car type and it's not hard to understand why they are so desirable.
Last year Volvo sold 30,996 XC90s in the US which is very competitive againsgt the 51,791 GLE sold. Would better engines lift Volvo sales? Absolutely but it would be to the detriment of Mercedes.
As you mentioned, Mercedes could take a stake in Volvo in order to reap rewards of any uplift in commercial success. The question is what could Mercedes get from Geely? Close collaboration on producing big volumes of affordable EVs?
hovabongZA
Tire Trailblazer
BMW Group declined offer from Mercedes investor Li Shufu
chonkoa
Aerodynamic Artisan
If this is true, it further buttress my point that this is about access to technology.
Wolfgang
Kraftwagen König
Daimler purchases 3.93% stake in BAIC's EV unit
Automotive News China | 2018/3/9
Daimler acquired a 3.93 percent stake in the electric vehicle subsidiary of joint venture partner BAIC Motor Group Co. The deal will allow it to “further deepen its understanding of Chinese consumers’ needs” for EVs, Daimler said in a statement Wednesday.
Daimler didn’t disclose further details about the deal.
The National Development and Reform Commission, China’s central economic planning agency which approved the deal in February, said the acquisition was made by Daimler Greater China Investment Co., Daimler’s investment arm in China.
Last month, Daimler Greater China Investment was permitted to buy part of the 4.79 percent interest that Jinggangshan New Energy Investment Management Co. holds in BAIC’s EV subsidiary, according to information the commission disclosed on its website.
Jinggangshan New Energy Investment Management, headquartered in the south China city of Shenzhen, specializes in investing in renewable energy and alternative energy vehicles.
BAIC is seeking to list its EV subsidiary on the domestic stock market.
The subsidiary, Beijing New Energy Vehicle Co. and established in 2009 in Beijing, focuses on the production and sale of electric passenger vehicles.
Beijing New Energy Vehicle is 37.27-percent owned by BAIC. Its other shareholders include the Beijing municipal government and Xinshixinye Investment Management Co., an investment company in east China’s Anhui province.
Beijing New Energy Vehicle is China’s largest manufacturer of EVs. In 2017, its EV deliveries soared 98 percent to 103,199.
Daimler and BAIC operate a passenger vehicle joint venture in Beijing that produces Mercedes-Benz sedans, crossovers and SUVs. They also operate a commercial vehicle partnership in the east China city of Fuzhou that builds Mercedes-Benz vans.
Daimler also runs an EV joint venture with BYD Co. which produces and sells EVs under the Denza brand.
Robbie
Schwarzwald Sprinter
Hi All
Excellent article in the FT (Backlash grows over Chinese deals for Germany’s corporate jewels) about German anxiety over this deal. I hadn't realised the German/Chinese issues ran so deep, as many of you had. For me, there was nothing the German government or Daimler could have done about Geely/Li buying the 10% stake. Perhaps this needs to change and appropriate legislation introduced. Bottom line though is that Daimler, lacking an anchor shareholder as its competitors do (BMW and VWAG), had nothing it could do to prevent this, other than complaining to the German government.
The other point missing in the otherwise good piece is that Geely has been a wonderful partner to Volvo, and has really helped turn them around, although I take the point that Volvo in 2010 was not the same as Daimler in 2018.
I think you need to be a subscriber to read.
Subscribe to read
Excellent article in the FT (Backlash grows over Chinese deals for Germany’s corporate jewels) about German anxiety over this deal. I hadn't realised the German/Chinese issues ran so deep, as many of you had. For me, there was nothing the German government or Daimler could have done about Geely/Li buying the 10% stake. Perhaps this needs to change and appropriate legislation introduced. Bottom line though is that Daimler, lacking an anchor shareholder as its competitors do (BMW and VWAG), had nothing it could do to prevent this, other than complaining to the German government.
The other point missing in the otherwise good piece is that Geely has been a wonderful partner to Volvo, and has really helped turn them around, although I take the point that Volvo in 2010 was not the same as Daimler in 2018.
I think you need to be a subscriber to read.
Subscribe to read
Robbie
Schwarzwald Sprinter
Some news on this topic, as expected although still speculative:
Daimler may buy tiny stake in Volvo, report says
Daimler may buy tiny stake in Volvo, report says
klier
Premium
Easy when you are a communist country that doesn't follow the rules of the west. Government money everywhere.
Whatever works for them, and money is money in the end, companies won't say no.
klier
Premium
Time for the EU and Trump to stop this I'd say. Trump has already started with his steel imports.
Good for him. But enough politics (sadly you can't go around politics when discussing the cheating Chinese economy, their industrial spies, and the U.S/EU allowing them to steal knowledge/tech by buying our companies)
Agreed, lets leave it at that for now.
Centurion
Apex Apex Predator
Access to Merc's 4 cylinder engines would be a big scoop for Geely. 6 cylinder engines are out of the question as they don't fit in Volvo engine bays.
chonkoa
Aerodynamic Artisan
I agree.
It is called conquest by purchase- that is what the chinese are doing. Using the money realised from initially selling low end product to you to purchase your high end technology.
Part of those realised gains also fund the militarization to protect and expand their trade routes. Nothing has changed.
DjordjeC63
Vorsprung Visionary
V6 350 bluetec could fit in Volvo.
Centurion
Apex Apex Predator
I don't know the exact size of Mercedes's V6 engines but it doesn't look like any Volvo could accommodate V6 or I6. The engine bays are rather small.
XC90
XC60
Mr. Mercedes
Premium
Umm...and how does this differ from anyone else?
Mr. Mercedes
Premium
They need to get on with it already and start the synergies between Mercedes and Volvo in safety tech and self driving technology.
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Mercedes-Benz Group AG is headquartered in Stuttgart, Germany.
Established in 1926, Mercedes-Benz Group produces consumer luxury
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and Mercedes-Maybach.
Its origin lies in Daimler-Motoren-Gesellschaft's 1901 Mercedes
and Carl Benz's 1886 Benz Patent-Motorwagen, which is widely regarded
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The slogan for the brand is "the best or nothing".
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