Mercedes CEO Deems Cutting Economic Ties With China “Unthinkable”

Giancarlo Perlas May 1, 2023

Mercedes-Benz CEO Ola Kaellenius believes cutting economic ties with China is “unthinkable” due to the interdependence of the global economy. The luxury carmaker’s dependency on the Chinese market, the world’s largest, has made decoupling from China unrealistic and puts the majority of Germany’s industry at risk.

Recently, National Security Advisor Jake Sullivan revealed the plan of the US to “de-risk and diversify” its existing links with China. This echoed the same sentiments aired by European Commission President Ursula von der Leyen in a policy speech last March before she flew to China. These statements left a wary note from businesses who are ever reliant on the giant Asian nation in terms of trade, including Mercedes.

In an interview with the German paper Bild am Sonntag, Kaellenius emphasized the close relationship between China and the major players in the global economy, such as Europe and the United States, making decoupling from China an unwise choice. He explained that the disruption of the pandemic and the Ukraine crisis may have highlighted the dangers of relying on dominant suppliers and the fragility of supply chains. However, the Mercedes CEO insisted that decoupling from China made no sense.

To drive his point, he reminded everyone that Mercedes’ top two shareholders are the Beijing Automotive Group Co Ltd and Geely Chairman Li Shufu. Also in the previous year, China was responsible for almost a fifth of the company’s revenues and over a third of its luxury car sales.

According to the Mercedes boss, this figure is expected to rise in the coming years. The CEO also believes that the savings accumulated by affluent Chinese consumers during the pandemic will lead to increased purchasing power, which could potentially benefit the automaker.

Final Thoughts

With the facts stated by the Mercedes CEO, such as having key shareholders in China and how the Chinese market is contributing to the growth of his company, decoupling from the Asian superpower is definitely an unwise choice. Therefore, further calls for such actions will surely be met with opposition from Mercedes-Benz and other key industry players doing business with the country.

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