And may strengthen its ties with suppliers there.
The car manufacturing business has changed vastly over the years as the world has moved towards a more global and interconnected economy. German automakers like Mercedes-Benz have invested billions into manufacturing plants in the United States and are even looking into new production locations such as Egypt. As Mercedes continues to look for strategic production advantages, its eyes have turned to China.
According to a Reuters report, Mercedes is looking to strengthen its supplier partnerships in China because they currently lead their American and European rivals in key technologies - namely, electric and connected cars.
Mercedes-Benz executive Wilko Stark explained that the industry push towards electric and connected cars has sparked a need for battery cell chemistry expertise from outside the company. "We will think about partnerships in some areas. The role of partnerships as a whole will gain in importance,” Stark said in a news conference. He added "We will intensify scouting of Chinese suppliers. China is more advanced than the United States in many areas of digital innovation."
We know Mercedes will build the batteries for its upcoming EQC SUV in the US but China maintains the advantage with electric mobility and digital services. For example, China is ahead of the US with the rollout of phone-based payment systems, which can give local suppliers an advantage.
"China will dramatically increase in importance,” Stark said. "In the area of connectivity services, the Chinese are ahead of the Americans; we have no choice but to deepen our relationship with these suppliers,” mentioning Chinese suppliers Alibaba and Tencent specifically. This certainly doesn't mean Mercedes will shift focus away from the US and Europe but it does show how quickly China is becoming a global player in the automotive industry.