BAIC's merger of Fujian Daimler facing a difficult birth

Shanghai, June 9 (Gasgoo.com) In contrast with Fujian Daimler's fast growing progress, the project of Beijing Automotive Industry Holding Co. Ltd. (BAIC) restructuring Fujian Daimler, which has been under the spotlight in the industry, is facing a difficult "birth".

"Beijing Auto is an ideal strategic partner, and the two sides are gaining a deeper understanding of each other," said Lian Xiaoqiang, president of Fujian Motor. Though he denied the cooperation with Beijing Auto has ended, the negotiation between Beijing Auto and Fujian Daimler has come to a standstill.

An insider revealed that besides the price disagreement, Daimler's promising market and the sufficient support from the local government for Fujian Motor, which plays a critical role in the M & A, all make Fujian Motor have a stronger desire to develop independently.

Fujian Motor's confidence also comes from the continuing improvement in sales. In 2009, Fujian Motor's sales grew 40% to 14 million units, reversing the shrinking sales situation which lasted for five consecutive years since 2004.

It is worth mentioning that another joint-venture of Fujian Motor, Southeast Motor in partnership with Mitsubishi Motors, also achieved a 100% year on year growth and made great profit.

As for the M&A, industry experts think that Beijing Auto is undoubtedly experiencing a huge funding gap after buying Saab models and technology. Therefore, pouring enormous sums of money in mergers and acquisitions do need careful consideration. What Beijing Auto needs to do now is to cement its market position instead of expanding blindly.