German auto giant Daimler, the parent company of Mercedes-Benz, is slowly expanding its interest in rival automakers. Already a shareholder in automakers such as Aston Martin, Renault Nissan and Tesla, Daimler has now finalized a deal to buy a 12 percent stake in Chinese automaker BAIC.

This marks the first time that a non-Chinese automaker has bought shares in a Chinese OEM, though the deal did undergo lengthy scrutinizing by the Chinese government. The move is a key part of Daimler’s strategy to strengthen its performance in China, a market where it has lagged rivals such as BMW and the Volkswagen Group.

With this investment, Daimler is also showing its support for BAIC’s intention to launch an initial public offering in the future. And, it gives the German automaker two seats on BAIC’s board of directors. As part of the deal, BAIC will increase its stake in a production joint venture between the two firms to 51 percent, while Daimler will increase its stake in a joint sales group by the same amount.

As one of China’s largest automakers, BAIC sold over 1.7 million vehicles in 2012. Recently, it was listed as number 336 in the Fortune Global 500. Daimler has been working with BAIC for the past decade, with projects including vehicle development and the manufacture of Mercedes-Benz vehicles in China.

In a statement, Daimler CEO Dr. Dieter Zetsche said, “Going forward, the cooperation between Daimler AG and BAIC Motor will contribute towards increasing our footprint in China and so enable us to actively participate even better in the huge opportunities the Chinese automotive market offers.”

BAIC isn’t Daimler’s only automotive partner in the Chinese market, as the German firm also has a 50:50 joint venture with BYD to build electric cars under the Denza brand. The initial Denza automobile is expected to hit the Chinese market in 2014.


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