BMW driving into a brave new world in China
BMW is poised to become the first foreign car company to take majority control of its Chinese venture as the country opens up one of its biggest industries to foreign ownership despite a worsening trade war with the US.
The second-biggest luxury-car maker plans to unveil the new ownership structure of its venture with Brilliance China Automotive Holdings soon, according to a person familiar with the plan, who asked not to be identified because the accord remains confidential. BMW is the biggest exporter of vehicles from the US to China, putting it among major companies most exposed to a trade war.
BMW currently holds a 50 per cent stake in the partnership. Beijing in April said it’ll remove the foreign ownership cap with any changes coming into effect for passenger car ventures from 2022. Shares of Brilliance and BAIC Motor, a partner of Daimler, both declined on concerns foreign carmakers gaining more control will mean they’ll miss out future profits. China is the biggest market for many brands, including Volkswagen, Audi, BMW and Daimler’s Mercedes-Benz.
BMW’s move highlights some of the paradoxes facing global companies as they look at the Chinese market. On one hand, Beijing is carrying through on a pledge to open up its economy to more foreign ownership, a long-standing plea of foreign firms.