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BMW is taking an unprecedented move for foreign automakers in the world's biggest car market, China. The German company said Thursday, it's paying around $4 billion to take control of its business in China. It's buying a majority stake in its local partner, Brilliance. The first move of this kind by a global automaker.
For years, China has forced car companies to go in with the partner if they want in the global market. However, Beijing is beginning to relax the rules as Reuters Adam Jourdan explains from Shanghai.>> This is really a landmark deal for the auto market here. It's the first time that any big global automaker has been able to and has opted to take a majority stake in its joint venture here in China.
Now every automaker be that Nissan, Ford, GM, you name it. Has had to operate in a 50-50 partnership going back decades. Now what this means is BMW will be the first to have the 75% stake. They will be in control. They eventually will control their manufacturing and be more in control of their sales.
>> And it all comes in the context of the rapidly escalating trade conflict between Beijing and Washington. BMW is one of the biggest exporters of cars from the US to China putting it square in the crosshairs to trade war.>> We've seen the amount of tax paid on automobiles reason by both sides but including China which is cars made by BMW of China have become more expensive.
And what this will mean going forward is that it will incentivize the BMW to make more cars here in China because they will get a larger slice of the profits for each car they sell. And going forward that would likely mean that we're gonna see BMW shift more of their production into the China market locally.
>> So this deal may be bad news for some regions of the US like South Carolina. Right now, that's where BMW makes many of the SUV models that dominate the Chinese market, but analysts say the new deal could see BMW move production of those cars outside the US.