Mercedes CEO says cutting ties with China is ‘unthinkable’

FRANKFURT — Cutting economic ties with China is unrealistic, Mercedes-Benz CEO Ola Kallenius told a German newspaper, and attempting to do so would put most of the country’s industry at risk.

Europe is trying to reduce its dependency on China as the disruption of the pandemic and the Ukraine crisis have highlighted the dangers of relying on dominant suppliers and the fragility of supply chains.

Kallenius said decoupling from China, the world’s second largest economy, was “unthinkable for almost all of German industry.”

“The major players in the global economy, Europe, the U.S. and China, are so closely intertwined that decoupling from China makes no sense,” he was quoted as saying the tabloid newspaper Bild am Sonntag.

German automakers depend on the Chinese car market, the world’s largest, and Mercedes counts China’s Beijing Automotive Group and Geely Chairman Li Shufu as its two top shareholders.

China accounted for 18 percent of revenues and 37 percent of car sales at Mercedes in 2022 and Kallenius predicted more to come.

“Our sales figures in China are increasing and I am quite optimistic that we will also grow this year. During the corona years, the wealthier Chinese in particular made extraordinary savings,” Kallenius said. “This purchasing power should benefit us.”