Germany frets over its corporate dependency on China

Germany frets over its corporate dependency on China

Carmakers are particularly susceptible to pressure from Beijing

Germany’s carmakers cannot believe their good fortune. Chinese consumers have ridden to their rescue again, a decade after pulling them out of a hole following the financial crisis.

“It’s almost too good to be true,” Ola Kallenius, chief executive of Daimler, said last month as he cheered a 23 per cent increase in sales in China in the third quarter. Prevented by coronavirus from taking an expensive foreign holiday, wealthy Chinese have been splashing out on luxury S-Class Mercedes cars instead.

Robust Chinese demand has helped Germany’s auto manufacturers and their suppliers to offset weaker European and US markets still afflicted by the pandemic. But it has also revived concerns that German industry is too dependent on China. And it has raised questions about whether Berlin will be willing to respond to growing pressure in the EU for a stronger line towards Beijing and to embrace a new transatlantic partnership on China under a Biden administration.

Daimler, which has two large Chinese shareholders, sells nearly 30 per cent of its Mercedes cars in China. It accounts for about 11 per cent of group revenues. For several companies in the Dax 30 index, China represents at least a fifth of sales including BMW, chipmaker Infineon and plastics manufacturer Covestro. Likewise, Volkswagen is estimated to generate a similar proportion of its sales in the country last year, selling nearly 40 per cent of its vehicles there.