GEELY HOLDING GROUP has acquired a stake worth about $9.2 billion in Daimler AG－9.69 percent of the company－through an investment fund, becoming the largest investor of the German automaker. Beijing News commented on Monday:

The investment furthers Geely's foray into the European auto market, and puts an end to months of speculation about a possible deal.

This is another eye-catching move by Geely, which has already purchased the brands of Volvo and a controlling stake in Lotus, and provides the automaker in Zhejiang province with access to badly needed advanced management and core technology.

Chinese enterprises have realized fast development since China launched reform and opening-up 40 years ago, and they have advantages in capital, scale and market, but they still lag behind leading global enterprises in terms of branding, services, management and core technology.

Mergers and acquisitions, which make use of their capital advantage, can help them catch up with the leading players in a short time, which represents another crucial stage in their upgrading.

Almost no Chinese bidders aim to simply expand their scale by purchasing companies in developed countries.

Moreover, Li Shufu, the chairman and founder of Geely, has stressed that Geely has not paid for the deal with its funds in China, but with funds from Geely's overseas branch that mostly come from the foreign capital market. This is important because China has strict rules on the outflow of capital.

Geely's investment in Daimler offers a good lesson to the other Chinese businesses that the overseas capital market can help them with overseas mergers and acquisitions without needing to use domestic funds, and the authorities' capital outflow restrictions do not necessarily mean Chinese companies must halt making acquisitions overseas.