At the beginning of next year, the Munich-based company will take over the majority in the Chinese production joint venture with Brilliance.
(Photo: dpa)
The German auto industry is shifting its weight further and further towards China. BMW wants to relocate part of its production from the USA to the Far East. There, sales not only grow faster, they can also earn more.
At the beginning of next year, the Munich-based company will take over the majority in the Chinese production joint venture with Brilliance. Daimler also wants to increase its capacity in China as quickly as possible. The Chinese partner BAIC is already Daimler’s largest single shareholder, as it became known on Monday.
Every single addition, every single relocation makes economic sense. Production follows sales. In Europe and the USA the markets have been stagnating for years, in China the growth story for BMW and Mercedes seems to be endless.
While VW is getting more and more competition from domestic brands in the mass market, business with expensive sedans and SUVs is still going well. So far, the Germans had to share the profits in China with domestic partners. BMW negotiated years ago to be the first western manufacturer to be allowed to take over the majority, and Daimler should follow suit very soon.
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But the risks are growing, for companies and German politics. BMW, Daimler and the VW Group are dependent on business in China, analysts assume that between 30 and 50 percent of profits come from the Far East. The government in Beijing dictates the conditions for the business: More and more added value has to be generated locally, technology and data transfer are mandatory.
The more the industry is dependent, the less leeway there is for German politics. The new German Foreign Minister Annalena Baerbock will feel these connections when she soon wants to speak in Beijing about human rights in Xinjiang and freedom of expression in Hong Kong.
More: Change of course at BMW – new electric version of the 3-series is built exclusively in China