MERCEDES BENZ iStock franz12 1028682748

Decoupling from China is “unthinkable for almost all of German industry,”
Mercedes-Benz CEO Ola Källenius told the German tabloid newspaper Bild am Sonntag. He added that the company cutting economic ties with China is unrealistic, according to Reuters.

“The major players in the global economy, Europe, the U.S. and China, are so closely intertwined that decoupling from China makes no sense,” Källenius said.

China and Chinese companies play a vital role in Mercedes-Benz’s business. Reuters said that Beijing Automotive Group Co. Ltd and Geely chairman Li Shufu are two of the company’s top shareholders, and China made up 18% of revenues and 37% of car sales for Mercedes-Benz in 2022.

In fact, Källenius expects more business to come out of China in 2023. “Our sales figures in China are increasing, and I am quite optimistic that we will also grow this year. During the corona years, the wealthier Chinese in particular made extraordinary savings,” he said. “This purchasing power should benefit us.”

Europe is currently trying to reduce its dependency on China as the COVID-19 pandemic, coupled with the ongoing war in Ukraine, has highlighted the dangers of relying on dominant suppliers and the fragility of supply chains. Simultaneously, Chinese car manufacturers have been filling the void left by global automakers
after they pulled operations and products out of Russia.

Carmakers including Geely Automobile Holdings Ltd., minivan maker Chery Automobile Co. and Great Wall Motor Co. — known for its affordable Haval brand — grabbed 17% of Russia’s auto market in 2022 after most of the world’s biggest automakers, including Volkswagen AG and Toyota Motor Corp., exited the country. 

While Western companies from Apple Inc. to Sony Corp., BP plc and McDonald’s Corp. withdrew from Russia in the early days of the war following swift economic sanctions and consumer pressure, many Chinese firms have continued to operate there with impunity. President Xi Jinping has stood by Vladimir Putin, and Chinese companies face little danger of a consumer backlash back home.