By William Boston and Robert Wall
BERLIN -- The billionaire chairman of Chinese car maker Zhejiang
Geely Holding Group Co. has accumulated a 9.7% stake, valued at
about $9 billion, in Germany's Daimler AG, the biggest overseas
investment yet by China Inc. in the West's automotive industry.
The move by Li Shufu, referred to by associates as Chairman Li,
is his most ambitious so far as he tries to create a global Chinese
auto maker that can compete with industry heavy hitters Volkswagen
AG, Toyota Motor Corp. and General Motors Co. Geely bought the
Volvo car brand in 2010 and has more recently acquired stakes in
car makers in Britain and Malaysia.
Mr. Li's investment in Daimler will likely give him a seat on
the board and an inside perspective on Daimler's premier
Mercedes-Benz car brand -- the company widely credited with
inventing the automobile. Still, it is too early to say if the move
is the first step in a more strategic alignment of Daimler and
Geely Automotive that would give Geely access to Daimler's advanced
technology in electric vehicles and self-driving cars.
The investment wasn't made directly by the company, which has
bought into a series of foreign car companies in recent years as it
simultaneously ramps up and upgrades its domestic car business, but
by Mr. Li himself, according to a filing in Germany late
Friday.
Geely said Mr. Li had no plans to acquire additional shares.
"The global automotive industry faces enormous innovation
opportunities as well as challenges from nonautomotive companies in
the 21st century," Mr. Li said in a statement posted on Geely's
verified Chinese social-media account. "It is hard for individual
car companies to win this war alone. In order to take the
initiative to seize the opportunity, we must refresh our ways of
thinking, join forces with friends and partners, and occupy
technological commanding heights through synergy and sharing."
Daimler said it welcomed the investment as a "vote of
confidence" in its future. The German car maker didn't say whether
Mr. Li would get a board seat, but said it looked forward to
discussing the investment with him.
The acquisition is the latest in a series of methodical bets
that Mr. Li has made in his quest to transform Geely, once derided
as the maker of low-cost, low-quality cars not fit for world
markets, into China's first global automotive player.
Mr. Li's investment in Daimler is also another milestone for
China. Within little more than a decade, China has evolved from a
nation of bicycles to become the world's largest automotive market,
with sales of 27.4 million new light vehicle last year. That
compares with 17 million new cars sold in the U.S. and 20 million
in Europe and Russia.
China has also become the world's biggest market for electric
vehicles, a key technology for the future. Beijing has ambitions to
leapfrog the West by developing trendsetting technology for
electric cars.
After a humbling trip in 2007 to Detroit, where Mr. Li
introduced the Geely brand to America, he turned his attention to
building a global empire through acquisitions.
In 2010, when Ford Motor Co. was reeling from the financial
crisis, Mr. Li bought its struggling Volvo Cars unit, based in
Gothenburg, Sweden. Over the next few years, Mr. Li helped steer
Volvo back to profitability, determined to make it a global premium
brand.
After years of heavy investment from Geely, Volvo is now a
thriving -- if still small -- high-end car maker. More recently,
Volvo and Geely have pushed aggressively into electric-car
development. Volvo promised last year to roll out electric or
hybrid-electric engines in all its new models starting in 2019.
Geely Holding in 2013 bought London Taxi, which makes
electric-utility vehicles and taxis.
Back in China, Geely Automotive has become the top domestic
brand in the country. Instead of turning out cheap and undependable
models, it began drawing Chinese customers away from some of the
big Western brands that had set up shop in China.
More recently, Geely put its overseas ambitions into high gear.
In May 2017, it agreed to buy a 51% stake in British sports-car
brand Lotus and a 49.9% stake in struggling Malaysian car maker
Proton Holdings Bhd. In December, Geely acquired 8.2% of Volvo AB,
the Swedish truck maker.
Hakan Samuelsson, the chief executive of Volvo Cars, describes
Mr. Li as a strategic thinker who is carrying out a grand plan to
create the first global player from China.
"What is the most credible Chinese global brand? Three years
ago, no one would have thought it would be Geely," he said in a
recent interview.
Associates of Mr. Li say he often tells them the challenge for
Geely isn't to compete against Ford and GM, but against Alphabet
Inc.'s Google unit and Apple Inc.
Daimler is one of the most advanced technology companies in the
world, a household name with massive stores of automotive patents
and know-how. It is on the front lines of the auto industry's
efforts to defend itself against Silicon Valley, which is
encroaching on auto-industry turf with the development of
car-sharing, ride-hailing services and self-driving vehicles.
Gang Wei, co-CEO of China Euro Vehicle Technology AB, the
research-and-development center in Gothenburg that is owned by
Geely Holding, said Mr. Li "is a strategic person first, an
entrepreneur second."
A Daimler spokesman said the company doesn't know what Mr. Li's
longer-term goals are, or exactly why he invested in their
company.
A closer association could be a boon for Daimler, too. The
Stuttgart-based company already has links to China through a joint
venture with BAIC Motor Group. The two agreed last year to make
electric vehicles for the Chinese market.
The investment, though, could cause waves in Germany. The
government there has become increasingly anxious about a wave of
Chinese investments and takeovers of its companies. Last year,
Berlin tightened scrutiny of foreign direct investment.
--
Yang Jie
in Beijing contributed to this article.
Write to William Boston at william.boston@wsj.com and Robert
Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
February 24, 2018 08:48 ET (13:48 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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