German automobile company Daimler is reportedly setting up a ride-hailing joint venture with Geely Group in China, a move that could help the Chinese firm build close relations with the Mercedes-Benz brand owner. Li Shufu, Chairman of Geely, had taken up a 9.69% stake in Daimler earlier in the year, renewing fears among Germans about its highly-prized expertise falling into the hands of Chinese.

Sources claim that Daimler had initially hesitated to form a broad based alliance, concerned with the possibility of alienating BAIC, the existing Chinses partner of Mercedes.  The German company, however, announced recently it would be teaming up with Geely in the Chinese ride-hailing market, which is dominated by Didi Chuxing.

In its statement, Daimler had said that the joint venture with Geely would offer ride-hailing mobility services in many Chinese cities and will use premium vehicles like Mercedes-Benz E-Class, S-Class and V-class, among others. The vehicles will not be limited to Mercedes-Benz only, the company had mentioned.

Although financial information pertaining to the deal was not disclosed, sources confirmed that headquarters of the 50:50 venture would be in Hangzhou, China. Daimler Mobility Services and Geely Group Company will be represented equally on the board of the new ride-hailing service, for which both the companies will together develop the software infrastructure needed to support operations in China.

President of Geely Holding, An Conghui, stated that developing such services, in which both the companies are already present, is a part of the company’s transformation into a global automotive technology group from just being a vehicle manufacturer.

The probability of autonomous cars being rolled out on the road has further intensified the competition between technology companies, ride-hailing platforms and traditional automakers to launch fleets of smartphone-hailed taxis or pursue collaborative deals. Ola, For instance, has been working together with Apple since November 2016, while Uber has attracted investments from Google and Toyota.