Daimler has been behind its major rivals in China, the largest vehicle market in the world. In fact, it sold just 228,000 cars in China in 2013, compared to Audi’s almost 492,000 and BMW’s over 362,000 deliveries. To catch up and even surpass them, Daimler is doing what was once regarded as unthinkable for the German carmaker – allowing access to new Mercedes-Benz models and suiting engines to Chinese regulations.
The carmaker’s continued lag in China has been attributed to it doubts over the sustainability of growth in the country. Likewise, German labor union has been putting up strong resistance to shifting output from Daimler's Sindelfingen plant.
Also, Daimler had been very wary of sharing technological know-how over concerns of piracy. But now Chinese authorities have taken significant steps to crack down on copyright violations, Daimler has become more lenient in popping the hoods of its vehicles for them.
Likewise, Daimler executives have realized that closer cooperation is the best option to take if they want to catch up with Audi and BMW in China, which has been growing substantially through the years. In fact, Daimler is commencing production of its new-generation C class both in China and Germany.
In the past, Daimler would delay production in China by months. Daimler’s joint venture with Beijing Automotive Group Co., Beijing Benz Automotive Co. (BBAC), is currently constructing a new production line for the Mercedes GLA compact.
Before the joint venture could the C class and the GLA, it must have models must undergo a 160,000km emission durability test and a regulation test with Chinese authorities – processes that may take up to a year.
The processes also entail allowing Chinese officials to take samples of components and make detailed measurements. Rene Reif, head of engineering and manufacturing at Beijing Benz, remarked that “to put it bluntly,” Daimler is transferring know-how. [source: automotive news - sub. required]