By on November 24, 2009

The China card. Picture courtesy cambridge-united.co.uk

It’s been year since we blogged Chinese press reports that China’s SAIC might buy GM. It turned out to be one of many Chinese rumors that followed. We became the target of hate mongering—some idiots even accused us of driving down GM’s and Chrysler’s stock price. Duh, buyout rumors usually drive prices up. At the time, the GM stock was worth at least a little money: the market cap of GM was less than Mattel.  Months later, the stock was worthless. GM and Chrysler went bankrupt. Instead of the Chinese owning GM and Chrysler, the American taxpayer ended up holding the barf bag.

It took a year and six days to dawn on CNN Money that a Chinese-owned GM might not be such an outlandish idea after all. “A Chinese-owned GM, it could happen,” headlines CNN Money today.

“GM could one day be Chinese owned. A shocking concept for the ultimate all-American company, but one some auto industry experts say isn’t too far-fetched.”

To prove their point, CNN trots out the notorious David Cole, who they identify as the chairman of the Center for Automotive Research, “a Michigan think tank.” Cole reveals to an aghast audience: “I can tell you right now the Chinese are shopping heavily in the U.S. auto sector.”

Two items of note:

One, Cole must have been under a rock. Since I’ve been writing for TTAC, the Chinese have been shopping in the U.S. auto sector more eagerly than Euro-trash at Macy’s. However, as amply chronicled by TTAC, nothing has come out of it. The China card has been played in every transaction, from Opel to Volvo, and nothing, nada, mei shen mo has happened. Even the Tengzhong-Hummer deal is still up in the air. In the meantime, the Chinese are packing up and leaving Mexico.

Two, TTAC readers know better than CNN. That “Michigan think tank” is nothing else than an industry and union funded organization, with the sole intent to separate the tax payers from their hard-earned money and to funnel it into bailouts. David Cole has been unmasked again and again as a mouthpiece of the UAW and GM, his analysis has been characterized by the dearly departed Robert Farago as “wildly exaggerated predictions of plague, pestilence and famine.” Apparently, this went right over the heads of CNN.

According to CNN, “Cole said such a deal isn’t imminent and wouldn’t happen until GM starts selling shares to the public, likely a year or more from now. But he says buying GM would be a major opportunity for the nascent Chinese auto industry.”

Let’s set aside the notion that Fitch just said that GM won’t be ready to sell shares to the public anytime soon. In its current financial state, GM would be delisted even from the pink sheets.

What is Cole up to? Is he talking up a stock that may be listed or not, God knows when? Or is he simply using the Chinese boogiemen to shake loose some additional taxpayers’ money for the supporters of his Michigan think tank? Which appears to have the depth of a puddle.

To make the slant-eyed boogiemen even scarier, CNN found Kim Korth, president of the auto consultancy IRN. She’s one of the few who thinks that GM’s dismal results “deserve to be applauded.”  As far as the Chinese buying GM goes, Corth fears “there would be a national outcry in that regard.”

We beg to differ. If anyone, Chinese or Martian, would buy GM at a price that gets the taxpayers’ money back, there would be a tickertape parade for the unlucky buyer.

Never mind. It’s not going to happen. Clueless Cole says “the Chinese have a lot of our money and they’re looking to invest it.” Wrong. The US has more than a trillion $ of  China’s money, already invested in US government debt. China is worried about the falling dollar and the creditworthiness of its debtor. They don’t need shakier investments.

Be on the lookout for more of these announcements. And watch your wallets.

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20 Comments on “China to Buy GM, Reloaded...”


  • avatar
    Rod Panhard

    Cole is selling fear-based twisted logic through the back door. If you recall a year ago, many folks pitched that GM and Chrysler had to be bailed out since, the theory went, they bailed us out in the Big One back in ’42, and if we got into another global shootin’ match, we’d need their industrial capacity.
    So, if Cole peddles fear, then as the lack of results continues from GM and Chrysler, they’ll stay on the dole, lest they fall into the hands of the Red Chinese! Or is that the Yellow Peril! And what happens when Homeland Security goes Code Orange! !?!?
    Suppose it DID come down to a shootin’ match, just like it did in my Uncle Ralph rode in B-24s over Ploesti … the Big One, that started back in ’42 (really ’33, but that’s another topic). Yup, remember when Opel was making trucks for the guy with the funny mustache? And Ford was making who-knows-what in Cologne and it didn’t smell good?
    Yup. It happened. The company we bailed out for Patriotism made trucks for Hitler. Do you think they talked about that when they were riding in the corporate jet on the way to the hearing?
    Probably not. So don’t believe them when they play the Patriotism card. It’s merely to keep GM and Chrysler on the dole. Semi-Permanently.

  • avatar
    johnny ro

    Think tank. I like that.
    I’m a freakin insurance company back office accountant. No, wait. I am happy to be able to speak to you today from my Boston financial reporting think tank.
     

  • avatar
    rcolayco

    Whether the amount sunk by the US government into GM represents the fair value of the company today – that’s what will determine whether any Chinese buyer will come forward to take the American public out; or IF the US government &/or public are willing to take a haircut if the current value is lower.  The Chinese are just too astute to be taken in.
    Whether the Chinese buy GM or not, one thing seems clear to me.  It will take less time for the Chinese automotive vehicle industry to get to where the Japanese and Koreans are than it took the Japanese and Koreans.  They have the market, and hey, car manufacture isn’t rocket science.  Oh, they’ll dismay others along the way by practicing less than cricket methods; that’s unfortunately part of the package.
    The modern Chinese nation recently celebrated their 60th anniversary, marking the time when Mao threw out the last emperor.  During the subsequent 30 years, his countrymen suffered disease and famine under his ill-conceived, draconian policies.  It’s only been 30 years since Deng declared a radically different approach, which launched the powerhouse that has emerged.
    From dire poverty to First World power in 30 years. . . joining the ranks of the top world vehicle manufacturers would be child’s play.

  • avatar
    Rday

    Cole is just another Shill out to promote himself and the detroit clique. And snag as many federal bailout bucks as he can. You can always take the opposite of what  he says and make a real good case. Nuff said.

  • avatar
    superbadd75

    Fear mongering, bullshit speculating, whatever. It seems like every day we read something here about the latest Chinese interest in some car company to break into the U.S. market, and we’ve yet to see any of them actually get a deal done. Even if a Chinese company buys GM, at this point they are a company that is not viable as-is, and living off of our tax money, and I think it’d be nice to get that money back. My only fear is that if a deal were to get done, the morons in Washington wouldn’t get us paid, citing job retention as a reason.  

  • avatar

    Rday

    I think the reasons you spell out are the reason the Chinese will continually fail outside the Chinese market.  They offer cheap inferior quality products but due to price they will sell in China, but not outside the country where high tariffs keep out even half-way decent competition.  National laws have helped them “partner” with many global auto-makers but the knowledge they steal “attain” doesn’t do any good if they decide to take good solid designs and cheap them out to make more profit.  The image problem they have to overcome is very bad, probably even worse than what the Japanese had to overcome in the 70′s & 80′s, and to be honest, I don’t think the Chinese are up to the task here.  Most of the companies really don’t care about improving quality as long as the profit margin is healthy.  They can buy a US marque to sell their cars under, but if the cars are built like shit, well… if it quacks like a duck, and looks like a duck…

    If GM suffers from a perception gap NOW, imagine what will happen when they have to overcome the stigma of being a Chinese owned company.  Right now the only selling point GM has is the patriotism, help out US workers (even if it’s a load of crap).  The perception gap only grows if that happens.  If people are already POed about the bailout, how are they going to feel when it all gets sold to China at pennies on the dollar we paid out? 

    At this point I think it is still probably worthwhile for a healthy Chinese company to buy GM if only to get the rights to the brand names which do carry some weight, and could be an asset. Would they really be willing to continue manufacturing in the US, and can they build a competent car even when they are given the design and technology to do so?  Maybe, but will they? 

    The only good thing I can think coming of it is the UAW will leave the table beaten and broken to the point they may finally die.  The Chinese are not going to tolerate the concessions the UAW gets from GM, and once any contracts are up, it’s adiós UAW.  This is only good in the fact the UAW really needs to be taken down a peg, but I think it would be disastrous for workers at GM because I doubt workplace safety and respect for the workforce in a Chinese run company would be anywhere near what is expected in modern US manufacturing.  It’s hard to say this is what would happen, but it can’t be discounted either. 

    Does the sale actually happen?  I doubt the US government would ever let this happen.  As much as I hate it, it looks like more of my money is going to be embezzled by the GM crook tank, and there is nothing any of us can do about it.  I’ll vote against the crooks doing it, but they will just be replaced by new crooks and liars, so it’s an endless battle of futility.

  • avatar
    no_slushbox

    The worst thing that David Cole said is that GM is the “ultimate all-American company”; what kind of piece of crap does he think America is?  The last time that claim was even close to true is the 1960s; GM is now the ultimate un-American company.

    For the current ultimate all-American company lets try GE, or AT&T, or ExxonMobil, Boing, or any of the Dow 30 companies now that bankrupt, de-listed GM has been replaced by Cisco on that index.

    That said, America would not stand for a Chinese takeover of GM.  Like the ” slant-eyed boogiemen” running China, Americans also realize the importance of labor intensive industries like automaking in preventing the civil unrest that comes with high unemployment - the US military can only employ so many uneducated people with contrived wars.

    “Wrong. The US has more than a trillion $ of  China’s money, already invested in US government debt.”  Interesting, in lending people with bad credit a lot of money to buy poorly built crap China seems a lot like GM/GMAC.

    • 0 avatar
      wsn

      David Cole was right on with “GM [being] the ultimate all-American company.” Yes, GM has changed, over the decades, from a solvent growing company to a bankrutped union hall. So has the US of A.

    • 0 avatar
      ASISEEIT

      America wouldn’t stand for a Chinese takeover of G.M.? What are you kidding me?!! Since Nixon Republicans have been PUSHING to open China(even with their horrible human rights record) and PUSHING  so-called FREE TRADE  agreements to maximize profits.  This has ballooned into GLOBALIZATION and with that went most labor intensive jobs and to further destroy our industrial base both parties have purposely left our border with Mexico wide open even after 911!!! This has flooded our country with under the table illegal workers, killed wages, eliminated health care, flooded the country with gangs, drugs, and graffitti!!!! Hey both parties are responsible but Republicans push and push these agreements and of course Clinton/Gore signed NAFTA and GATT into law. Add to this the huge rise in higher education costs and we have now created a Liberal nanny state filled with illegals soon to be citizens sending huge portions of the money they illegally earn back to their country of origin and they will be drawing SSA benefits and popping out babies every forty weeks from 12 years old until menopause and they will be able to enjoy our new universal health care plan paid for by skyrocketing taxes!!! Oh by the way nobody gives a shit whether China buys G.M. or Not!!!!

  • avatar
    wsn

    from Opel to Volvo, and nothing, nada, bu has happened
    —-
    Bertel, “bu” is not the right word here. “Bu” is not a noun, but instead is equivalent to “not” or “no”. There is no direct Chinese term for “nothing”. The closest thing (but not exact) is “mei shen mo”.
     

  • avatar
    iNeon

    Hey Bertel– What has Chrysler got to do with China’s interest in GM? What has Chrysler’s bankruptcy got to do with China’s interest in GM?
    It’s trite at this point. Stop covering this news with a slant. Literally! HAHA I SLAY ME! Wait, is it OK that I throw slurs out?
    5 Compelling reasons, and I’ll shut up.

    • 0 avatar
      Jeff Puthuff

      Since you can’t be bothered to click the first link: One year or so ago, “Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler, China’s 21st Century Business Herald reports . . .”
      GM & Chrysler, both now suckling at the taxpayer’s teat.

  • avatar
    wsn

    Yeah, just sell GM to China. Here are the benefits:
    1) American taxpayers will have their money back.
    2) Chinese will be burderned with GM and thus the “yellow peril” is contained.
    3) UAW will help improve worker’s right in China.
     
    Sounds like a win-win-win to me.

  • avatar
    iNeon

    I’m not prepared to drop my argument because, prior to the restructuring of both corporations, they were watched by Chinese investments. This gives no indication of Chrysler’s current position with Fiat and only serves to muddy waters going forward. Maybe that is the point. Beyond being a footnote in these masturbatory writings, Chrysler is a non-player. I still do not understand how they as a corporation merit mention when the issue at hand is yet another “the Chinese have money, and they’re coming!” story.

  • avatar
    Glenn Mercer

    Um, isn’t Kim Korth both spelled with a “k” and female?  Maybe she had an operation….

  • avatar

    Glenn: Kim Korth, korrekt and korrekted. CNN spelled her with a C.  They also call SAIC SIAC …

  • avatar
    pf21

    How much is GM really worth? I heard Volvo had debts and obligations up to $4 billion in their book. So for the buyer of Volvo, the total price is actually as high as $6 billion.
    Regarding the Chinese manufacturers leaving Mexico, I think they might finally realize that China is Da auto market in the world for the next 20 years, not N.A., Japan or Europe.
    BTW, I do not think auto industry is really labor intensive. It is actually all about automation and artificial intelligence. Both quantity and quality ultimately depends on how good the robots are.

    • 0 avatar
      wsn

      Very easy to find out the worth of GM.
      Step 1: Obama declare the sale of GM on Jan 1st of 2011 (give prospective buyer time to finance)
      Step 2: State the terms and conditions (i.e. how many UAW jobs to preserve)
      Step 3: Auction off to highest bidder. The transaction price is the worth of GM.


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