Why The Chinese Aren't Coming

Edward Niedermeyer
by Edward Niedermeyer
why the chinese aren t coming

Automotive News China [sub] managing editor Yang Jian has a column warning Chinese firms not attempt to buy Volvo anytime soon. Yang considers the Shanghai Automotive Industry Works (SAIC) and First Auto Works (FAW) as the most likely suitors for Ford's Swedish division. They alone have access to the state-controlled bank financing needed to make the deal happen. Never mind that, Yang says, there are a wealth of lessons that China is still not ready to buy-up western car brands. The first-ever Chinese purchase of a western brand, Nanjing Auto Group's takeover of MG, led to an overleveraged NAG being bought up by SAIC. When SAIC bought Korean firm Ssangyong, it had to endure labor walkouts over plans to shift production from Korea to China, followed by a slide into unprofitability. As a friend of Yang's at SAIC puts it "SAIC certainly won't consider buying (Volvo) since we know how much hassle an overseas acquisition could create." So it turns out that a booming market isn't enough for Chinese firms to overcome their unfree-market disadvantages.

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  • N Number N Number on Jul 09, 2008

    All of this is irrelevant. After all, Volvo is not for sale. Ford has said it's committed to the brand. Case closed. Sarcasm may be the lowest form of humor, but that's all I've got right now.

  • John Horner John Horner on Jul 09, 2008

    China has four times as many potential customers as does the US. Why spend the considerable effort required to break into a stagnant US market when there are so much easier pickings at home? Besides, the shipping lanes from China to the US are already chock-full-O-crap headed for our hyper consuming big box shoppers. People think of the stuff they buy there as essentially disposable. In fact, automobiles are one of the last consumer purchases where the buyers expect the thing to last more than a few years.

  • Blowfish Blowfish on Jul 09, 2008

    Don't we forget the Chinese has held a lot of US trade surpluses/debentures/ junk bonds/ wall paper eventually hope not too soon , they could probably have enuf to buy out the General Motors too. There are 2 ways too look at, if to hold US$ debenture for long term is gong to shrink. The buzz word nobody wanted to hear as either a bond holder or a patient. They mind as well buy something now before it slowly melted away just like the North/ South Ice cap.

  • Blowfish Blowfish on Jul 09, 2008

    All of this is irrelevant. After all, Volvo is not for sale. Ford has said it’s committed to the brand. Case closed. Never say never, we never able to see the balance sheet of the Blu Oval boyz. Is like a plane when go low on fuel, u need to ditch even the most precious cargo too. Or we all go down. If it can save the mother ship then is a painful decision. No different than the guy who got hand stuck in the rock had to slowly severe it inorder to save his own Derriere.