From tenacity to compromise on the 10-year joint venture process of Daimler commercial vehicles in China
Daimler's joint venture journey in China has been anything but smooth, marked by long and complex negotiations. The collaboration with Yaxing lasted four years, while the talks for Fujian Daimler Automotive Industry Co., Ltd. took six years, and the partnership with Foton Motor also extended over five years. These prolonged processes reflected the challenges of aligning different interests and strategies in a highly competitive market.
After four years of intense negotiations, Yaxing and Daimler-Benz finally formed Yaxing-Benz in 1997, with each party holding a 50% stake. The total investment was $95.5 million, and the plan was to establish two production lines for Mercedes-Benz and Yaxing passenger cars. At the time, the joint venture was seen as a major achievement from high-level diplomatic visits to Germany and was widely anticipated by the public.
Initially, Yaxing-Benz introduced four luxury buses ranging from 8 to 12 meters. However, these vehicles were largely imported, with only minimal local assembly, resulting in a localization rate below 2%. The products were not mature, and their high prices led to poor market performance. Only the YBL6120 model saw some success, while the other three models were eventually discontinued. According to insiders, the failure stemmed from conflicts over control and incomplete joint venture structures, ultimately leading to the collapse of the project.
In contrast, Daimler's cooperation with Foton Motor took a different path. After a six-year negotiation period, Fujian Daimler Automotive Industry Co., Ltd. was officially founded in Fuzhou on October 23, 2007. This marked a significant milestone for the Mercedes-Benz light commercial vehicle project, which had been delayed for years. The collaboration involved indirect partnerships due to existing Taiwanese investments in Southeastern Automobile, highlighting the complexity of navigating foreign capital in China.
Another key development came when Daimler and Foton Motor signed a cooperation agreement, marking a shift in strategy. Daimler gave up the production of the Mercedes-Benz brand heavy trucks in the joint venture, opting instead to focus solely on the Futian Auman brand. This decision was influenced by several factors: the limited market for high-end Mercedes-Benz trucks in China, the lack of profitability from previous ventures, and the need to align with China’s push for domestic brands.
Earlier, Daimler had attempted a joint venture with FAW Group but failed due to disagreements over branding. Daimler insisted on abandoning the "Liberation" brand, which ultimately derailed the deal. By choosing to compromise with Foton, Daimler aimed to secure better returns and gain government support, which is crucial for long-term success in the Chinese market.
Industry experts believe that Daimler conducted extensive research into the Chinese market, taking into account national policies, market trends, and strategic goals before making its decision. This careful analysis helped Daimler navigate the complexities of the Chinese business environment and ensure the viability of its joint ventures.
The story of Daimler in China reflects both the challenges and opportunities of international collaboration in one of the world’s most dynamic markets. From failed attempts to successful partnerships, the company has learned valuable lessons that continue to shape its approach in the region.
Water Truck,Large Capacity Water Transport Vehicle,Engineering Water Transport Vehicle,Large Water Transport Truck
Hubei HuiLong Special Automobile co., LTD , https://www.huilongtruck.com