Chinese Catfight: BAIC Blocks Daimler's Dalliances With BYD

Ah, there’s nothing like a good old Chinese catfight over a foreign joint venture partner. Daimler’s Chinese partner BAIC (they build the E-Class and C-Class in Beijing) became increasingly green-eyed watching Daimler playing footsie with up-start BYD. Now, BAIC is throwing a fit.

Gasgoo says that BAIC might withdraw from or delay its planned acquisition of Fujian Daimler, and this could frustrate Daimler’s partnership with BYD. Why is that?

On May 27. BYD and Daimler signed an agreement to develop an all electric vehicle “specific to the requirements of the Chinese market.” Like all joint ventures that could include a car-manufacturing plant, it needs the Chinese government’s regulatory approval.

Write this down, you might learn something: A foreign automaker is only allowed to be party to two auto-making joint ventures in China. Promiscuous Daimler already has two. There is Beijing Benz-DaimlerChrysler Automotive Co., Ltd. (Beijing Benz, a venture with BAIC), and there is Fujian Daimler Automotive Co., Ltd. (a venture with Fujian Motors and Taiwan’s China Motors). The idea was that BAIC buys Fujian Daimler, so that the coast is clear for further Daimler dalliances with BYD.

Suddenly, there are “problems.” Earlier this month, Chinese media reported that Beijing Auto and Fujian Daimler are at an impasse over money and doubts whether buying Fujian Daimler’s is a good idea. Now, there is talk in Beijing that BAIC could derail the whole arrangement. As long as BAIC pouts, Daimler can’t close the deal with BYD. Selling the JV to someone else is no option, as long as Daimler stays in.

Fujian Daimler was created in 2008 as a joint venture with Fujian Motors Group (FJMG) and Taiwan-based China Motors Corp (CMC). The company was created to produce Mercedes-Benz multi-purpose vehicles (MPVs) such as Vito, Sprinter and more. In April 2010, the first Mercedes-Benz Viano transporter rolled off the new production line in Fuzhou. You don’t just walk away from something like that to build cars that run on batteries.

And let’s not forget: BAIC is (through a mesh of holdings) basic ally owned by the Municipality of Beijing, and you know who runs that place. You want them on your good side if you plan on a long and prosperous business in China, one of Daimler’s most important markets, not to mention largest market of their imported S-Class.

(PS: While there are plenty of videos showing violent Shanghai women – or this one from Singapore – there is no footage from Beijing. Beijing ladies are known for their snottiness and poise, but they’d never do that. They’d hire someone.)