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.
How so? They’re already voting Dem anyway.
Ford Pinto unsafe? I bought a used one in the 80’s for 300.00, but it should been half price as it soon began literally breaking in two (and i only weighed about 130). That is how i cam to understand what they meant by (dis)unibody contruction. But to be fair, i had some pretty good old Fords also.
Yes,as the recent Presidential election would indicate. So, what can conservatives do about that. I would assume calling for 2 or 3 million people to be thrown out of work because of conservative principles does not particularly attract a great number of voters.
Please buy them you dumb suckers.
There are two auto industries in the USA, the northern and the southern. The southern has the ability to weather the downturn because they are lean and mean, no 3 to 1 pension to worker ratios to try and dig out from under. The Big 3 are screwed because they promised too much to their employees. Time to go belly up and restructure. To bail out would be the last straw for this sorry excuse for a country. I don’t pay for some guy who retired at 55 to pull a pension. I’m not retiring until God retires me with illness or death. F them. Get back to work and stop asking for my help.
Conservatives can simply opt out. Don’t oppose the proposed bailout in Congress, but don’t support it either.
The Dems *will not* proceed without the threadbare cover of bipartisan support. Not until the Obamanation gets into office, and perhaps not even then.
Now, what can the rest of us do?
I’m still thinking about that. It would have something to do with adopting some of the Left’s tactics... Something to do with accusing the Left of selling out our “chirruns” futures to the Chinese and shipping all those jobs to China with our tax dollars. We need to lay the groundwork that gets people to associate ‘voting Dem’ with ‘unemployment’.
My take:
The loan is going to go through, one way or another. The economic consequences of not doing the deal are far worse.
No, they’re not. All they’re doing is putting off the day of reckoning at best - and making it worse. See: British Leyland.
At worst, they’re selling it out to the Chinese.
Either way, conservatives need to stay WAY the hell away from this one.
No comparison between British Leyland and GM. For one thing, GM doesn’t have Lucas Electric to deal with...ha!
In the next ten years there’s going to be a huge number of cars sold in this country, primarily to replace all the SUVs sold over the last ten years.
Once this industry is gone, it’s gone forever.
Um, actually, they do.
TRW took over Lucas UK some time back.
TRW is a supplier to GM.
TRW UK products have been spotted in US GMs from time to time.
And some of GM’s products have actually been less reliable in terms of their electronics fitment than my 1987 Jaguar XJ6.
Thing is, the BL debacle was created by the UK government bailing out their motor industry. We already know where this path leads.
I'd love to see it only for the entertainment value of watching the UAW try to negotiate with the Chinese...
There won’t be any negotiating. It’ll be like what happened when they bought MG Rover. One day shortly after purchase the union droids show up to find:
1. A closed and locked plant.
2. A notice telling them that their last paychecks will be mailed to them.
3. A sign for a local demolition company with a notice that demolition will begin in a week.
Yup, that’s right, rather than deal with the idiot Brit unions, the Chinese took the tooling (not the machinery, just the tooling), junked the rest, and knocked down the Longbridge MG factory.
Different circumstances than BL. The whole thing is on a completely different scale and different marketplace, not to mention on the threshold of different technology.
Also, we’re not talking about gubmint control, but a loan that would enable the companies to move ahead.
The other thing — which I’m hesitant to mention — is that this may be an opportunity to push the unions into finally evolving into 21st century organizations.
Um, have you not noticed that the loans are going to REQUIRE government control?
There’s control and then there’s control. I doubt it’ll be micro-managed by the gubmint.
It baffles me that there are people on this site who actually seem to be rooting for the Chinese. The mindset is astounding and goes something like, “I hate unions so much I’m siding with the Communists!”
Britsh Motor Holdings originally wasn’t supposed to be micromanaged by the government either.
We know where that went. And GM will go the same way.
Assuming for a second that you’re right — is it in anyone’s interest to have this major American industry managed by the Chinese?
Don’t look at me, I’m an advocate of the “GM should go Chapter 11 to avoid Chinese control” position.
I'm beginning to think the big Dem majority is not going to provide enough courage for the Dems to just force everything down the Republicans' throats.
The Democrats fear full accountability more than anything on Earth.
They see the economy in a downward spiral and they know that the vengeance of an angry electorate could swiftly turn on them.
The Chinese pour concrete without rebar steel for reinforcement. That’s why when they have earthquakes, buildings crumble and everyone inside dies.
I am sorry but I must be missing some part of this story. I do not understand how a bailout might fascilitate transfer to Chinese ownership. Any legislation authorizing a bail out scheme would have to provide for an equity position in the form of preferred ownership. Once in Chapter 11, the Courts will only apply a public interest test as it relates to the various classes of creditors and suppliers. Some consideration can be made in respect of employees but the Court does not have a mandate to consider the national interest in the form of economic security. The issue of economic security is clearly a political matter and it is rightly decided by elected officials.
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