Posted on 11/18/2008 2:31:16 PM PST by Spktyr
Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler, China’s 21st Century Business Herald reports today. [A National Enquirer the paper is not. It is one of China's leading business newspapers, with a daily readership over three million.] The paper cites a senior official of China’s Ministry of Industry and Information Technology– the state regulator of China’s auto industry– who dropped the hint that “the auto manufacturing giants in China, such as Shanghai Automotive Industry Corporation (SAIC) and Dongfeng Motor Corporation, have the capability and intention to buy some assets of the two crisis-plagued American automakers.” These hints are very often followed with quick action in the Middle Kingdom. The hints were dropped just a few days after the same Chinese government gave its auto makers the go-ahead to invest abroad. And why would they do that?
A take-over of a large overseas auto maker would fit perfectly into China’s plans. As reported before, China has realized that its export chances are slim without unfettered access to foreign technology. The brand cachet of Chinese cars abroad is, shall we say, challenged. The Chinese could easily export Made-in-China VWs, Toyotas, Buicks. If their joint venture partner would let them. The solution: Buy the joint venture partner. Especially, when he’s in deep trouble.
At current market valuations (GM is worth less than Mattel) the Chinese government can afford to buy GM with petty cash. Even a hundred billion $ would barely dent China’s more than $2t in currency reserves. For nobody in the world would buying GM and (while they are at it) Chrysler make more sense than for the Chinese. Overlap? What overlap? They would gain instant access to the world’s markets with accepted brands, and proven technology.
21st Century Business Herald, obviously with input from higher-up, writes that Chinese industry must change and upgrade. China wants their factories to change from low-value-added manufacturing to technically innovative and financially-sound high-value-add industries. Says the paper: “It would be much easier now for strong Chinese automakers to go global by acquiring some assets of their U.S. counterparts in times of crisis.”
Deloitte & Touche sees a trend: “Chinese automakers can start with buying out the OEM projects and Chinese ventures of some global carmakers such as GM and Chrysler.”
The Chinese appear to have bigger plans than an accounting firm can imagine. 21st Century Business Herald acts and writes as if its already a done deal, and the beginning of more to come. “In the coming two years China is likely to see a few of its large Chinese automakers and other manufacturing enterprises set a precedent for achieving globalization by acquiring global companies, just like SAIC or Dongfeng’s possible acquisition of troubled GM or Chrysler.”
Just in case you missed it, the Shanghai Automotive Industry Corporation (SAIC) is China’s largest auto manufacturer. In 1984, the company entered a joint venture with Volkswagen. A decade later, SAIC entered a joint venture with General Motors. In 2007, SAIC bought the Nanjing Automobile Corporation, which had acquired British MG Rover in 2005.
Dongfeng Motor Corporation is a public company, although 70 percent of their shares are reported to be in government hands. They also are one of China’s Big Three. The company has numerous joint venture partners, such as Nissan, Peugeot-Citroen, Honda, and Kia. Dongfeng (which means “East Wind”) was founded at the behest of Mao Zedong himself in 1968.
As a result of a bailout, GM shares will continue to trade on the open market. GM's market capitalization is well under $2 billion right now and that's pocket change to the Chinese. And any institutional shareholder (and that's most of the remaining GM shareholders) will jump at *any* offer made.
Chapter 11 makes it MUCH more difficult for the Chinese to buy GM, as they will have to negotiate with both the court trustees and all the suppliers.
Still supporting that bailout? Remember, it means that the Chinese will be able to buy and exploit both the nameplates and the bailout dollars that we gave them.
I’m with you on this issue.
I don’t think they mean they are going to buy all of GM; they’re interested in the profitable overseas operations, especially the ones in China. Probably Holden, too.
UAW v. Red China?
They could sell coverage of their contract negotiations on pay-per-view.
Avid TTAC reader here.
F*** the chicoms.
LOL, a quick perusal of Chinese auto tech says this:
“Jiangling Landwind X6 gets zero score in crash test..”
“In German crash test, China’s Brilliance BS6 sedan fails miserably ...”
I’ve had mixed feelings but I damn sure don’t want China to get a piece.
I’ve been leaning toward Chapter 11 for a few days now. Auto companies need to clean house and the bailout (not loan) will just be more of the same as far as the unions go. If the UAW thinks it’s bad now, wait ‘til they all lose their pensions to China. At least with Chapter 11 the retirees might recoup a small portion of their pensions.
And, yes, I think they need to take the Chapter 11 route. And Congress needs to suspend a bunch of regulations, especially CAFE.
Still think Chapter 11 is a bad idea and that a bailout is a good idea?
Remember, a bailout now means that the Chinese get GM.
Chapter 11 is the best of the bad choices remaining to GM. Pressure GM to declare Chapter 11 now if, as you claim, you wish to see manufacturing remain in this country.
So, tell me again, with a straight face, that you support a UAW bailout which would give GM to the Chinese. I dare you.
It could also be “forcing their hand” for GM. Better yet, if the UAW can spend $400mm on an election, why can’t they spend $400mm on saving the hand that feeds them?
LOL, a quick perusal of Chinese auto tech says this:
“Jiangling Landwind X6 gets zero score in crash test..”
“In German crash test, China’s Brilliance BS6 sedan fails miserably ...”
Now that is what I call population control. And it is probably painted with lead paint.
On the positive side, if China takes over GM at least the interiors won’t be getting any worse...
The Chinese government has 2 trillion in cash reserves and we have going on 11 trillion in government debt. That’s scary. I hope Republicans go back to being fiscally responsible. I’d like to see Republican leadership fighting to cut spending, balance the budget and pay down our massive debt.
I can just see all those UAW types doing tai chi in the morning, after sweeping the factory floor and the parking lot starting at 5 AM.
Did I say it wrong up there? I think Chapter 11 would be better, the workers would get a tiny amount of their pensions if GM went that route, or so someone is telling the retirees.
I think we can make it, heck, we’ll make it just so the Chi-coms stay away from our companies. Is this why Congress has been hemming and hawing about the bailout? Waiting for the Chicoms? Forget it.
We’re planning on working as many jobs as we need to make it at this point.
Just checked out some vids on youtube.
At least, the ones that are still there.
http://www.youtube.com/watch?v=DZWy_fASSiQ
Quite interesting.
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