Chinese Automakers May Buy GM and Chrysler

Started by 565, November 22, 2008, 01:12:27 AM

565

http://www.thetruthaboutcars.com/breaking-news-chinese-may-buy-gm-and-chrysler/

"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."


I will be laughing my head off if this actually happens.

I can't wait for the DIC on the C7 Corvette to read:   "Corvette, made in China"

Gotta-Qik-C7

This country is going down the shitter!  :cry: Gimmie a break!
2014 C7 Vert, 2002 Silverado, 2005 Road Glide

dazzleman

The Chinese are at the stage when they're building their inheritance for future generations, while we're spending what we've built up in the past, and borrowing against a future that might not even be there.

We better wake up fast.
A good friend will come bail you out of jail...BUT, a true friend will be sitting next to you saying, DAMN...that was fun!

Catman

That would be a national security issue in my opinion.

dazzleman

Quote from: Catman on November 22, 2008, 06:15:09 AM
That would be a national security issue in my opinion.

It's hard to disagree.  Do we want a potentially hostile foreign power to control a significant portion of our manufacturing capability?

This is where the 'global economy' really starts to hit home.  Where do we draw the line on sovereignty?  We do have Japanese and German owned companies producing cars in the US right now.  What if that had been the case in 1940?  Or what if the Germans and Japanese had owned a large chunk of the auto manufacturers back then, the companies that ended up producing much of our war equipment?

I think that for too long, we've taken the position that these things don't matter, just as we've said it doesn't matter who buys the debt that the government issues to cover our overspending.  In the short run, maybe it doesn't, but in the long run, the fact that we can't finance our own deficits, and have to rely on the Chinese to do so, leaves us in a potentially humiliating position.  We're pissing away all the economic capital that it has taken many decades to build up.

We need a top-to-bottom review of these policies to get us on the right track for the future.  We're on a very dangerous path right now.
A good friend will come bail you out of jail...BUT, a true friend will be sitting next to you saying, DAMN...that was fun!

Galaxy

Quote from: dazzleman on November 22, 2008, 06:33:24 AM
We do have Japanese and German owned companies producing cars in the US right now.  What if that had been the case in 1940?  Or what if the Germans and Japanese had owned a large chunk of the auto manufacturers back then, the companies that ended up producing much of our war equipment?

Japanese and German assets where seized and vice versa. Even today you have the German company Merck KGaA battling with it's former American subsidiary Merck & Co Inc over who owns what.  :ohyeah:

That was also the reason why many South American countries declared war on Germany a few days before Germany surrendered, when the writing was alrready on the wall. They could have their cake and eat it to.

ifcar

Before World War II, Ford had at least one factory in Germany. Germany just took the plant over for its own uses. In an emergency situation like you describe, the US could do the same to a Chinese-owned plant in the US.

Galaxy

Quote from: ifcar on November 22, 2008, 08:03:09 AM
Before World War II, Ford had at least one factory in Germany. Germany just took the plant over for its own uses. In an emergency situation like you describe, the US could do the same to a Chinese-owned plant in the US.

Opel was also already US owened at the time.

Submariner

#8
why is everyone surprised?  China and India have been rapidly building up their infrastructure, while we're shipping millions of jobs and (trillions) of dollars to help the process while paying UAW motherfuckers 65 an hour to produce absolute dog shit cars 

It seems like absolute capitalism has started to shift from the Peoples Republic of America to the United States of China.

If we are that desperate, I'd much rather see them go to Japan. 
2010 G-550  //  2019 GLS-550

S204STi

I thought a bailout would be bad, but this would be worse.  By default their sales would tank... who wants to buy Chinese cars?  Let alone further prop up their economy?

Submariner

Quote from: R-inge on November 22, 2008, 08:24:09 AM
I thought a bailout would be bad, but this would be worse.  By default their sales would tank... who wants to buy Chinese cars?  Let alone further prop up their economy?

But China has the power to make it work.  That's the (scary) Problem.  We're excited over getting a free ride, when our economy is taking a dump, and foreign powers are making significant strides in economic and military power.
2010 G-550  //  2019 GLS-550

ifcar

Quote from: R-inge on November 22, 2008, 08:24:09 AM
I thought a bailout would be bad, but this would be worse.  By default their sales would tank... who wants to buy Chinese cars?  Let alone further prop up their economy?

They'd still be selling the same products, they'd just have different owners. Does anyone say they wouldn't buy a Jaguar because it's an Indian car?

S204STi

Quote from: ifcar on November 22, 2008, 08:45:32 AM
They'd still be selling the same products, they'd just have different owners. Does anyone say they wouldn't buy a Jaguar because it's an Indian car?


Nobody has a problem with  India, as far as I know.  A lot of people who've payed attention in history class have a real problem with China.

ifcar

Quote from: R-inge on November 22, 2008, 08:52:48 AM

Nobody has a problem with  India, as far as I know.  A lot of people who've payed attention in history class have a real problem with China.

Which is why they don't buy anything else from China?

565

People thought the same thing when Lenovo took over IBM's personal computer branch.  IBM's were usually high end business computers and people predicted consumers wouldn't stand Chinese quality.  But Lenovo basically kept everything the same, including the original staff of IBM Yamato labs in Japan that designed the laptops.  The quality remained the same, the reviews remained good, and repeat consumers basically felt the hand over was more or less seemless.  Thinkpads  notebooks remained a class leader, and Lenovo managed to piggy back from the back of the line right up to the front. The upshot was that Lenovo then started to improve their own home brewed computers using the technology gained from IBM.

Indeed cars are a lot more expensive than electronics (cars are second only the houses).  Yet high end consumer electronics probably rank as the 3rd most expensive group of single purchases we make now days.  From your high end LCD, to your Iphone/Ipod, to your personal computer, to your Xbox or Playstation, the vast majority of those things were made in China.  Counting everything up, I've probably spend close to 10K on electronics in recent memory (laptop, TV, PS3, Ipod, Cell phone, Hard drives, batteries, memory cards, etc), with the vast majority made in China.

As for people having a problem with China from history class, that would have applied to German and Japan more than any country in the 20th century.  Those two countries probably committed the biggest acts of genocide ever recorded.  Still people go absolutely gah gah when they find something made in Germany or made in Japan.  We forgive them because they make such high quality products.  People's memories are short.  Does anyone care that BMW's white propeller on blue sky were for the engines of bombers that dropped bombs on the allies?  Or that Mitsubishi's silver Zero were part of the force that ambushed Pearl Harbor?  At least none of these Chinese car companies have actually directly killed American soldiers in the field.

2o6

I can see SAIC actually buying pieces of GM or Chrysler to gain a foothold in the US market. SAIC actually has decent products, from what I heard. Geely and Lifan would also do well. Chery has proven that they can not be trusted, that's why Bricklin pulled out.

S204STi

Quote from: ifcar on November 22, 2008, 08:57:16 AM
Which is why they don't buy anything else from China?

I see the auto industry differently from textiles and toys.

2o6

Quote from: R-inge on November 22, 2008, 11:41:17 AM
I see the auto industry differently from textiles and toys.


One thing though: As apparant with every autoshow, they're collectively improving exponentially.

S204STi

Quote from: 565 on November 22, 2008, 10:17:06 AM
People thought the same thing when Lenovo took over IBM's personal computer branch.  IBM's were usually high end business computers and people predicted consumers wouldn't stand Chinese quality.  But Lenovo basically kept everything the same, including the original staff of IBM Yamato labs in Japan that designed the laptops.  The quality remained the same, the reviews remained good, and repeat consumers basically felt the hand over was more or less seemless.  Thinkpads  notebooks remained a class leader, and Lenovo managed to piggy back from the back of the line right up to the front. The upshot was that Lenovo then started to improve their own home brewed computers using the technology gained from IBM.

Indeed cars are a lot more expensive than electronics (cars are second only the houses).  Yet high end consumer electronics probably rank as the 3rd most expensive group of single purchases we make now days.  From your high end LCD, to your Iphone/Ipod, to your personal computer, to your Xbox or Playstation, the vast majority of those things were made in China.  Counting everything up, I've probably spend close to 10K on electronics in recent memory (laptop, TV, PS3, Ipod, Cell phone, Hard drives, batteries, memory cards, etc), with the vast majority made in China.

As for people having a problem with China from history class, that would have applied to German and Japan more than any country in the 20th century.  Those two countries probably committed the biggest acts of genocide ever recorded.  Still people go absolutely gah gah when they find something made in Germany or made in Japan.  We forgive them because they make such high quality products.  People's memories are short.  Does anyone care that BMW's white propeller on blue sky were for the engines of bombers that dropped bombs on the allies?  Or that Mitsubishi's silver Zero were part of the force that ambushed Pearl Harbor?  At least none of these Chinese car companies have actually directly killed American soldiers in the field.

The WWII era folks who are anti-german or anti-japanese products are dying out, and the rest of the world has moved on realizing that these countries are now good friends and allies.  China is still a country ruled by a party known for brutality, minimizing personal freedom, and for being politically against us on nearly every major issue.  Why give them power over our manufacturing and a major source of jobs in our country?

The main issue I see is that Chinese businesses aren't just Chinese businesses, the government has a hand in the pot as well.

2o6

Quote from: R-inge on November 22, 2008, 11:43:03 AM


The main issue I see is that Chinese businesses aren't just Chinese businesses, the government has a hand in the pot as well.


Except a few. Not all are public owned.

hotrodalex

Quote from: 2o6 on November 22, 2008, 11:45:14 AM

Except a few. Not all are public owned.

Doesn't matter. If the Chinese government wants a company to do something, the company will do it. Private or not.

2o6

Quote from: hotrodalex on November 22, 2008, 02:01:14 PM
Doesn't matter. If the Chinese government wants a company to do something, the company will do it. Private or not.


Doesn't the American government do the same thing?

MX793

Quote from: 2o6 on November 22, 2008, 02:04:45 PM

Doesn't the American government do the same thing?

No.  The only direct control the US government has over private corporations is through law.  Short of passing new legislation, corporations do not bow at the whim of the government.  If anything, major corporations have a large influence over the government, not the other way around.
Needs more Jiggawatts

2016 Ford Mustang GTPP / 2011 Toyota Rav4 Base AWD / 2014 Kawasaki Ninja 1000 ABS
1992 Nissan 240SX Fastback / 2004 Mazda Mazda3s / 2011 Ford Mustang V6 Premium / 2007 Suzuki GSF1250SA Bandit / 2006 VW Jetta 2.5

GoCougs

#23
In regards to Germany and Japan, the Allies at least put society-ending hits on 'em, and rebuilt them into world leading nations respecting capitalism, civil rights and democracy (mostly). Not so China.

The backlash I think would be larger because of the bailout than Chinese ownership. The Chinese at least have the financial wherewith all to break the UAW, perhaps even take the companies private, and otherwise can do what needs to be done.

Of course having a semi-hostile foreign powers' SOE intimately involved in a major US manufacturing sector is troubling, but alas, Detroit and political winds that favored unions, protectionism and otherwise fostered the decadence of Detroit, forced the issue.

Submariner

Quote from: GoCougs on November 22, 2008, 02:42:22 PM
In regards to Germany and Japan, the Allies at least put society-ending hits on 'em, and rebuilt them into world leading nations respecting capitalism, civil rights and democracy (mostly). Not so China.

The backlash I think would be larger because of the bailout than Chinese ownership. The Chinese at least have the financial wherewith all to break the UAW, perhaps even take the companies private, and otherwise can do what needs to be done.

Of course having a semi-hostile foreign powers' SOE intimately involved in a major US manufacturing sector is troubling, but alas, Detroit and political winds that favored unions, protectionism and otherwise fostered the decadence of Detroit, forced the issue.

Maybe this will send them a message?

Then again, i expect nothing but the most astonishing stupidity to come out of Detroit, and the UAW, so who knows.
2010 G-550  //  2019 GLS-550

Tave

Quote from: dazzleman on November 22, 2008, 06:33:24 AM
What if that had been the case in 1940?  Or what if the Germans and Japanese had owned a large chunk of the auto manufacturers back then, the companies that ended up producing much of our war equipment?

Actually, one of the reasons the war was so difficult is because German manufacturing cartels made a bunch of advantageous deals with US companies which resulted in the run-up of arms in Germany and the supply shortages in the US.

I forgot all the details (this was a topic I discovered in a Senate report from the late-40s while I was doing an editing project). The irony here is the US companies agreed to this shit in an attempt to protect the American market from foreign companies (as well as set prices).

I think it went something like, Germany agreed to sell no heavy capital or industrial goods in the US if the US agreed to sell none of that abroad.
As I write, highly civilized human beings are flying overhead, trying to kill me.

Quote from: thecarnut on March 16, 2008, 10:33:43 AM
Depending on price, that could be a good deal.

Onslaught

Quote from: R-inge on November 22, 2008, 11:41:17 AM
I see the auto industry differently from textiles and toys.
I'm not so sure others care.

JWC

Imagine if the Chinese ran a US based company as they do their Chinese based companies.

There if the person in charge screws up, they execute him.  Imagine, if Detroit's Big Three found themselves in the situation they are in now with the Chinese government in charge.   They wouldn't be call to Beijing to discuss a bailout....it may well be to discuss their preferred method of execution.  :lol:

dazzleman

Quote from: JWC on November 23, 2008, 07:14:33 AM
Imagine if the Chinese ran a US based company as they do their Chinese based companies.

There if the person in charge screws up, they execute him.  Imagine, if Detroit's Big Three found themselves in the situation they are in now with the Chinese government in charge.   They wouldn't be call to Beijing to discuss a bailout....it may well be to discuss their preferred method of execution.  :lol:

Maybe the Chinese are onto something..... :lol:
A good friend will come bail you out of jail...BUT, a true friend will be sitting next to you saying, DAMN...that was fun!

Colonel Cadillac