Mercedes-Benz Goes Pedal To The Metal In China

The top German luxury car brands are taking their longstanding showdown to Chinese showrooms. Mercedes, the best-known brand, has found itself playing catch-up behind BMW and Audi.

Lagging behind Audi and BMW, Mercedes is looking to make its move in China
Lagging behind Audi and BMW, Mercedes is looking to make its move in China
Zhang Yaodong

BEIJING - There has been a lot of activity lately in China amongst the top three German luxury car brands: Mercedes-Benz, BMW, and Audi. In particular, Mercedes is revving things up in China: establishing a design center, building an engine plant, and combining the sales channels of its China-made cars and its imported cars into one. Its production capability is to increase to 100,000 cars per year.

Indeed, it's about time that Mercedes speeds up. For the first half of this year, Mercedes' sales, although they increased by 59% in China, are nonetheless still 18,000 cars behind BMW, and 44,000 cars behind Audi. As for the global market, Mercedes has been caught by Audi, and its sales gap behind BMW has widened to 79,000 cars.

In a micro-blog survey about the sales of these three car brands over the past five years, almost all respondents ranked Mercedes last.

I have never figured out why Mercedes is being left behind on the performance front in the popular mindset. Objectively speaking, among these three major brands, Benz has 125 years of glorious history, is the best-known, and has the strongest premium offering. Not only does it have the most complete range of cars and the most available product range, it is certainly not the worst in technical terms among the three car manufacturers.

Mercedes' actual market performance is not really as bad as its ranking, since to buy some of its models the purchaser has to pay well above the list price. Nonetheless, sales of its C and E models, which should increase the brand's market share, have been outdistanced by competitors.

There are several reasons for the situation. First, Mercedes' parent company, the Daimler group, has committed a series of mistakes in its merger and acquisitions strategy over the past 15 years. As such, it wasted a lot of its potential. That Mercedes invented the automobile makes it arrogant, conservative and stubborn. When it finally came to the Chinese market, not only is it already late, the run-up period has also taken too long.

Now that Mercedes has finally realized its problem, it has started to change. It set up a 30 billion-RMB (4.6 billion-dollar) investment and 500,000 cars product capability plan, and is accelerating new product rollouts. The effects of these measures are expected to show in the next two to three years.

I'm firmly optimistic about Benz's prospects in China, as the strength of its brand combines with the introductions of new models on the market. Also, the Chinese state automative holding BAIC Group, which is in a crucial development period, relies heavily on Beijing Benz, and can create competitive advantages.

Nevertheless, Mercedes has to adjust in order to speed up. In particular, it needs to try much harder in eliminating the friction in its integration of imported cars with domestically made cars. Currently, some reports say that a joint venture will start within this year. Lei Shing Hong Ltd, which used to be Mercedes' major distributor in China, will substantially lose its share, whereas the BAIC Group's influence will grow. Thus Mercedes' sales in China will be the responsibility of just one company and will undoubtedly reduce the sales channel chaos.

This is only the first step. What is further required for Mercedes is for it to localize its R&D and its human resources. Not only are these related to its manufacturing and procurement, but also to its design issues. The limited sales of C and E class cars has much to do with the fact that Mercedes' configurations and features do not conform to the Chinese market's needs.

The Chinese luxury car market is dominated by the three German car manufacturers. For Mercedes to catch up with the other two, it needs to change even faster than its rivals.

Read the original story in Chinese

Photo - Mercedes-Benz F-Cell

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Ecological Angst In India, A Mining Dumpsite As Neighbor

Local villagers in western India have been forced to live with a mining waste site on the edge of town. What happens when you wake up one day and the giant mound of industrial waste has imploded?

The mining dumpsite is situated just outside of the Badi village in the coastal state of Gujarat

Sukanya Shantha

BADI — Last week, when the men and women from the Bharwad community in this small village in western India stepped out for their daily work to herd livestock, they were greeted with a strange sight.

The 20-meter-high small hill that had formed at the open-cast mining dumpsite had suddenly sunk. Unsure of the reason behind the sudden caving-in, they immediately informed other villagers. In no time, word had traveled far, even drawing the attention of environment specialists and activists from outside town.

This mining dumpsite situated less than 500 meters outside of the Badi village in the coastal state of Gujarat has been a matter of serious concern ever since the Gujarat Power Corporation Limited began lignite mining work here in early 2017. The power plant is run by the Power Gujarat State Electricity Corporation Limited, which was previously known as the Bhavnagar Energy Company Ltd.

Vasudev Gohil, a 43-year-old resident of Badi village says that though the dumping site is technically situated outside the village, locals must pass the area on a daily basis.

"We are constantly on tenterhooks and looking for danger signs," he says. Indeed, their state of alert is how the sudden change in the shape of the dumpsite was noticed in the first place.

Can you trust environmental officials?

For someone visiting the place for the first time, the changes may not stand out. "But we have lived all our lives here, we know every little detail of this village. And when a 150-meter-long stretch cave-in by over 25-30 feet, the change can't be overlooked," Gohil adds.

This is not the first time that the dumpsite has worried local residents. Last November, a large part of the flattened part of the dumpsite had developed deep cracks and several flat areas had suddenly got elevated. While the officials had attributed this significant elevation to the high pressure of water in the upper strata of soil in the region, environment experts had pointed to seismic activities. The change is evident even today, nearly a year since it happened.

It could have sunk because of the rain.

After the recent incident, when the villagers raised an alarm and sent a written complaint to the regional Gujarat Pollution Control Board, an official visit to the site was arranged, along with the district administration and the mining department.

The regional pollution board officer Bhavnagar, A.G. Oza, insists the changes "aren't worrisome" and attributes it to the weather.

"The area received heavy rain this time. It is possible that the soil could have sunk in because of the rain," he tells The Wire. The Board, he says, along with the mining department, is now trying to assess if the caving-in had any impact on the ground surface.

"We visited the site as soon as a complaint was made. Samples have already been sent to the laboratory and we will have a clear idea only once the reports are made available," Oza adds.

Women from the Surkha village have to travel several kilometers to find potable water

Sukanya Shantha/The Wire

A questionable claim

That the dumpsite had sunk in was noticeable for at least three days between October 1 and 3, but Rohit Prajapati of an environmental watchdog group Paryavaran Suraksha Samiti, noted that it was not the first time.

"This is the third time in four years that something so strange is happening. It is a disaster in the making and the authorities ought to examine the root cause of the problem," Prajapati says, adding that the department has repeatedly failed to properly address the issue.

He also contests the GPCB's claim that excess rain could lead to something so drastic. "Then why was similar impact not seen on other dumping sites in the region? One cannot arrive at conclusions for geological changes without a deeper study of them," he says. "It can have deadly implications."

Living in pollution

The villagers have also accused the GPCB of overlooking their complaint of water pollution which has rendered a large part of the land, most importantly, the gauchar or grazing land, useless.

"In the absence of a wall or a barrier, the pollutant has freely mixed with the water bodies here and has slowly started polluting both our soil and water," complains 23- year-old Nikul Kantharia.

He says ever since the mining project took off in the region, he, like most other villagers has been forced to take his livestock farther away to graze. "Nothing grows on the grazing land anymore and the grass closer to the dumpsite makes our cattle ill," Kantharia claims.

The mining work should have been stopped long ago

Prajapati and Bharat Jambucha, a well-known environmental activist and proponent of organic farming from the region, both point to blatant violations of environmental laws in the execution of mining work, with at least 12 violations cited by local officials. "But nothing happened after that. Mining work has continued without any hassles," Jambucha says. Among some glaring violations include the absence of a boundary wall around the dumping site and proper disposal of mining effluents.

The mining work has also continued without a most basic requirement – effluent treatment plant and sewage treatment plant at the mining site, Prajapati points out. "The mining work should have been stopped long ago. And the company should have been levied a heavy fine. But no such thing happened," he adds.

In some villages, the groundwater level has depleted over the past few years and villagers attribute it to the mining project. Women from Surkha village travel several kilometers outside for potable water. "This is new. Until five years ago, we had some water in the village and did not have to lug water every day," says Shilaben Kantharia.

The mine has affected the landscape around the villages

Sukanya Shantha/The Wire

Resisting lignite mining

The lignite mining project has a long history of resistance. Agricultural land, along with grazing land were acquired from the cluster of 12 adjoining villages in the coastal Ghogha taluka between 1994 and 1997. The locals estimate that villagers here lost anything between 40-100% of their land to the project. "We were paid a standard Rs 40,000 per bigha," Narendra, a local photographer, says.

The money, Narendra says, felt decent in 1994 but for those who had been dependent on this land, the years to come proved very challenging. "Several villagers have now taken a small patch of land in the neighboring villages on lease and are cultivating cotton and groundnut there," Narendra says.

They were dependent on others' land for work.

Bharat Jambucha says things get further complicated for the communities which were historically landless. "Most families belonging to the Dalit or other marginalized populations in the region never owned any land. They were dependent on others' land for work. Once villagers lost their land to the project, the landless were pushed out of the village," he adds. His organization, Prakrutik Kheti Juth, has been at the forefront, fighting for the rights of the villages affected in the lignite mining project.

In 2017, when the mining project finally took off, villagers from across 12 villages protested. The demonstration was disrupted after police used force and beat many protesters. More than 350 of them were booked for rioting.

The villagers, however, did not give up. Protests and hunger strikes have continued from time to time. A few villagers even sent a letter to the President of India threatening that they would commit suicide if the government did not return their land.

"We let them have our land for over 20 years," says Gohil.

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