Mercedes In China, Joint-Venture Lessons For The "New Normal"

A Mercedes-AMG GT S at the Auto Shanghai 2015 in April
A Mercedes-AMG GT S at the Auto Shanghai 2015 in April

BEIJING â€" After enjoying years of double-digit growth, China’s luxury car market has screeched to an unprecedented slowdown with a growth rate of less than 6% for the first half of 2015. But there is one notable exception to the slowdown: the Beijing Benz Automotive Co. (BBAC) â€" the joint venture between the Chinese state-owned Beijing Automotive Group and Daimler AG, the holding company of Mercedes-Benz. And for the first time, in July, BBAC outsold BMW.

This is clearly a welcomed birthday gift as the joint venture marks 10 years since its founding. The past decade of exploration, adjustment and development, the company’s factory area has now expanded one and a half times, and the number of employees three times to some 12,000. By the end of 2014, the BBAC registered sales of more than half a million vehicles. The company’s production has now increased nearly six-fold since its founding.

So what are the reasons behind Beijing Benz's success?

First, we can point to consistent Sino-German economic cooperation over the years that has helped grease the wheels of the joint venture between Beijing Automotive Group and Daimler AG. As strategic cooperation deepened, BBAC was able to implement a number of core projects over time that allowed for the establishment of world-class industrial production inside China.

In March 2013, a Mercedes-Benz rear wheel drive architecture plant was completed. This is Daimler’s biggest car body assembly facility, in terms of manufacturing capability, outside of Germany. Using a multi-model mixed-production line and a flexible conveyor system, as well as modular assembly, this production base can produce with unmatched efficiency based on the lean production method of zero-inventory management.

Also, in November 2013, an engine plant was officially put into operation that essentially changed the BBAC from simply a car manufacturer to one that also produces components and masters the latest core manufacturing technologies. The plant turns out the cylinder block, cylinder head and crankshaft â€" the engine’s three core parts â€" providing confirmation that BBAC’s manufacturing quality has met the highest global standard set by Daimler.

Moreover, Iate last year, the BBAC research and development center was opened, Daimler’s largest joint venture R&D center, providing important technical support for vehicles tailored to Chinese customers.

Enriching the product line

Over the past ten years China’s premium car market has seen a high average annual growth of 30%. In the face of such vigorous demand the BBAC has continuously introduced Mercedes-Benz models and established efficient production chains. Out of the target sales of 300,000 Mercedes units in China this year, more than half of them are expected to be produced locally by BBAC.

The BBAC has held on to the credo “same brand, same quality” and followed the Mercedes-Benz quality management feedback loop, so that the product fully complies with the brand’s global standard. As a Sino-German joint venture, BBAC has constantly absorbed the most advanced management concepts and experience over the past decade, notably the lean management aims of achieving the fastest response to market needs through scientific and effective tracking.

After years and years of development, BBAC has established a complete training system composed of three components: projects, skills, and management training. Between 2008 and July 2015, BBAC sent nearly 1,200 employees to participate in training courses in Germany, effectively creating a large number of highly qualified professionals for the Chinese auto industry.

Finally, the joint venture has worked within an environmental-friendly framework, consistently introducing state-of-the-art green innovation and transforming existing technology and equipment to offer car models of lower energy consumption and emissions.

The broader context of the success of Beijing Benz is as a model for China’s “New Normal,” as the economy shifts gear from high-speed to medium-speed growth. It's a lesson that is 10 years in the making.

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Feed The Future

COP26 Should Mark A Turning Point In Solving The Climate Crisis

Slow Food calls for an action plan to significantly reduce and improve the production and consumption of meat, dairy, and eggs by 2050.

A new dawn?

If, as the saying goes, we are what we eat, the same also goes for the animals that end up on our plate. How we feed our own food can have knock-on effects, not just for our own health but also for the planet. We are now aware of the meat and dairy industry's significant carbon footprint, responsible for more than a third of global anthropogenic greenhouse gas emissions.

Large-scale cattle productions that favor pure profit over more sustainable practices also add to environmental woes through biodiversity loss, deforestation and pesticide use — with some of the world's richest countries contributing disproportionately: The five biggest meat and milk producers emit the same amount of greenhouse gases as the oil giant Exxon.

The good news is that we could meet — if we would — some of these challenges with an array of innovative solutions, as the fields of farming, breeding and nutrition look at ways to shift from centralized intensive agro industry toward a more localized, smaller-scale and more organic approach to production.

Cows fed corn and grain-based diets may grow larger and are ready to be processed at a younger age — but this requires significant energy, as well as land and water resources; in contrast, grass and hay-fed cows support a regenerative farming model in which grazing can contribute to restoring the health of soil through increased microbial diversity. Compared to highly processed GM crops, natural-grass diets with minimal cereals also lead to more nutrient-rich livestock, producing better quality meat, milk and cheese. Farmers have started focusing on breeding native animal species that are best adapted to local environmental contexts.

This new approach to agricultural practices is closely linked to the concept of agroecology, where farming works in tandem with the environment instead of exploiting it. If mowed a few times a year, for instance, natural meadows produce hay that is rich in grasses, legumes and flowers of the sunflower family, like daisies, dandelions, thistles and cornflowers. These biomes become reservoirs of biodiversity for our countryside, hosting countless species of vegetables, insects and birds, many of which are at risk of extinction. Until recently, these were common habitats in meadows that were not plugged or tilled and only required light fertilization. Today, however, they are becoming increasingly threatened: in the plains, where the terrain is used for monocultures like corn; or in hills and mountains, where fields are facing gradual abandonment.

It is worth noting that extensive agriculture, which requires smaller amounts of capital and labor in relation to the size of farmed land, can actually help curb climate change effects through carbon dioxide absorption. Researchers at the University of California, Davis determined that in their state, grasslands and rangelands have actually acted as more resilient carbon sinks than forests in recent years. Through a system of carbon uptake, these lands provide a form of natural compensation, going as far as canceling the farms' impact on the planet, rendering them carbon "creditors."

In the meantime, grasslands and pastures allow animals to live in accordance with their natural behavioral needs, spending most of the year outside being raised by bonafide farmers who care about animal welfare. A recent study by Nature found that allowing cows to graze out of doors has both psychological and physical health benefits, as they seem to enjoy the open space and ability to lie on the soft ground.

Some might worry about the economic losses that come with this slower and smaller business model, but there are also opportunities for creativity in diversifying activities, like agro-tourism and direct sales that can actually increase a farm's profit margin. This form of sustainable production goes hand-in-hand with the Slow Meat campaign, which encourages people to reduce their meat consumption while buying better quality, sustainable meat.

Others may assume that the only environmentally-conscious diet is entirely plant-based. That is indeed a valuable and viable option, but there are also thoughtful ways to consume meat in moderation — and more sustainably. It also should be noted that many fruits and vegetables have surprisingly large carbon footprints: The industrial-scale cultivation of avocados, for example, requires massive amounts of water and causes great hardship to farming communities in Latin America.

But forging a broad shift toward more "biodiversity-friendly" pastoralism requires action by both those producing and eating meat, and those with the legislative power to enact industry-wide change. It is urgent that policies be put into place to support a return to long-established agricultural practices that can sustainably feed future generations. Although no country in the world today has a defined strategy to decrease consumption while transforming production, governments are bound to play a key role in the green transition, present and future.

In Europe, Slow Food recommends that the Fit for 55 package include reducing emissions from agriculture activities by 65% (based on 2005 levels) by 2050. Agriculture-related land use emissions should also reach net-zero by 2040 and become a sink of -150 Mt CO2eq by 2050. But these targets can only be met if the EU farming sector adopts agroecological practices at a regional scale, and if consumers shift to more sustainable diets. If we are indeed what we eat, we should also care deeply about how the choices we make impact the planet that feeds us.

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