On Tuesday Beijing Automotive Group Co Ltd. indicated that it had acquired 5% stake in Daimler (OTCMKTS:DMLRY) which further cements the relationship between China and the German automotive company following the emergence of Geely Holdings a competitor.

Beijing Automotive acquires 5% stake in Daimler

With the 5% stock acquisition Beijing Automotive Group will also have voting rights equal to the stake. For a while the companies have been partners in China in Daimler’s move of establishing joint ventures to produce cars. However in 2018 a new player entered the matrix when Geely Holdings’ Chairman Li Shufu acquired a 9.69% stake in Daimler with the goal of collaborating with the company to manufacture self-driving and electric cars.

With the acquisition Beijing Automotive Group Chairman Heyi Xu indicated that the move reinforces the company’s alignments as well as its relentless support for the German carmaker’s management and strategy.

The move will however raise concerns in German regarding the growing influence of China in its industrial sector. In recent years there has been increased acquisition of German companies by Chinese companies and the most notable is Kuka which is a maker of industrial robots.

Chinese market vital for success of Daimler

With cost of making electric car batteries being high most carmakers have found it hard to build cheap zero-emission cars and as a result most of them have looked at collaborating with Chinese companies to realize the dream. China on its end is looking to grow its production of electric cars as a way of limiting its dependence on imported fossil fuels.

In March this year Daimler agreed to work together with Hangzhou based Geely in developing the next generation Smart-branded cars. China is seen as a force in the development of electric cars since Chinese companies dominate in the production of electronic and electric equipment although they are still lagging behind when it comes to technology related with internal combustion engine.

Regarding the investment Dailmer’s CEO Ola Kallenius indicated that the Chinese market is very vital to the company’s success not only in terms of sales but also in terms of product development and production.