Editorial: GM China: "We Can't Be Listed in the Filing." Yes, You Can
Government Motors is launching a barrage of press releases in an attempt to shock and awe all naysayers. All is fine with its Asian operations, they are insulated from the bankruptcy of the mother ship, it’s great business as usual. As far as China (GM’s second largest market behind the United States) is concerned, business never has been better! It seems everybody is counting on the Chinese consumer to bail out the US government’s bailout.
GM China’s Prez, Kevin Wale, opened the salvo in China Daily: “General Motors Corp.’s fast-growing China operation will be unaffected by the parent company’s bankruptcy. Plans to open a new factory within five years will not change, even as GM closes US facilities.” Gettelfinger will be thrilled.
And, yes, “GM China is sticking with a five-year plan to double annual sales to 2 million units and roll out 30 new or updated models.”
More good news: Yesterday, GM China released their May sales—way before anybody else in China. Sales rose 50 percent over May 2008, Gasgoo reports. The Buick New Excelle, based on the Opel Astra Delta II platform, is selling especially well. So is the Buick New Regal, based on the Opel Insignia. And the Chevy Cruze, also a Delta II descendant.
Wale isn’t worried by the fact that many of his moving models are based on Opel technology: “The technology for the vehicles we sell is held by General Motors, and I don’t see any implications from the new structure in Europe.” Magna and its Russian partners may have a different opinion.
The Dept. of The Treasury even denied that there might be a secret deal to keep Opel and Magna out of the U.S.A. and China. “Newspaper accounts that Treasury is insisting that Opel stay out of the U.S. or Chinese markets are incorrect. The U.S. government strongly supports free markets,” Treasury spokeswoman Jenni Engebretsen said. Treasury keeps a backdoor open: If Magna and GM cut their own deals, then that’s their own business, an unnamed Obama administration official said to Reuters. I zee nozzink, especially not the Sherman act.
GM China sent a statement to Gasgoo, claiming that “the court supervised reinvention of GM in the United States will have no substantial impact on Shanghai GM, and Shanghai GM will continue its normal business operations as usual.” The statement insists that the intellectual property rights of products produced by Shanghai GM will be included in the New GM, and that GM’s joint ventures in China are not included in the court filings. Kudos for the euphemism of the day: Court supervised reinvention. Sure beats extraordinary rendition (a.k.a. “impromptu concert”.)
Readers of Bloomberg are told that GM “did not include its international operations in a filing for bankruptcy protection.”
Readers of the Wall Street Journal receive the same good news: “It is absolutely business as usual in China,” the WSJ cites Kevin Wale. “None of General Motor’s operations outside of the U.S. are included in the Chapter 11 filing, including GM China, our joint ventures and our other China operations.”
TTAC’s B&B know better. A court document filed Monday with the United States Bankruptcy Court Southern District of New York, made available through TTAC’s resident court reporter, Justin Berkowitz, names the following Chinese companies as part of the General Motors bankruptcy: Pan Asia Technical Automotive Center Company, SAIC GM Wuling Automobile Ltd., Shanghai General Motors Corporation, Shanghai GM, Shanghai GM (Shenyeng) Norsom Motors Co. Ltd., Shanghai GM Dongyue Motors Co. Ltd., and Shanghai GM Dongyue Powertrain. That’s only a partial list of GM’s international operations named in the filing.
The list presented to the court was obviously done with care, and wasn’t just a cut & pastie from the latest Sarbanes-Oxley filing. GM Europe, handed over into the care of a trustee appointed by the German government, isn’t there. Also missing is GM’s Australian unit, GM Holden Ltd. Holden “expects to be part of the new GM and will not cut jobs,” Holden’s managing director Mark Reuss said to Bloomberg. Whether the listed companies will finally end up in a “Good GM” or “Bad GM” doesn’t change the fact that they are all included in the filing.
The list of GM’s 50 largest unsecured creditors, also filed on Monday, reads like a Who’s Who of the parts business. Delphi is owed $111 million. Bosch is owed $66 million. Lear Corp. is owed $44 million. Renco Group is owed $37 million. Johnson Controls is owed $32 million. Denso is owed $29 million. TRW is owed $27 million. Magna is owed $26 million. American Axle is owed $26 million. Continental AG is owed $15 million. Tenneco is owed $15 million. Yazaki is owed $14 million. International Components Corp. is owed $12 million. Visteon is owed $10 million. And the list goes on. No wonder that companies on that list have already declared bankruptcy themselves, or are listed as bankruptcy risks. Thousands of smaller suppliers are affected. According to CNN Money, “a vast network of companies outside Detroit are bracing for impact. Suppliers to the auto goliaths are going to feel the aftershocks of the industry’s titanic shift.”
Business as usual? Viewed through the eyes of GM, it probably is business as usual.
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- Craiger 1970s Battlestar Galactica Cylon face.
To clarify this, Berkowitz needs to get the laws "Pursuant to Rule 1007(a)(1) of the Federal Rules of Bankruptcy Procedure and Rule 1007-3 of the Local Rules for the United States Bankruptcy Court for the Southern District of New York" and explain wtf they mean. I quickly got http://www.law.cornell.edu/rules/frbp/rules.htm but too lazy to pursue further.
MichaelJ: You should be working for GM's PR dept. I wasn't and am not talking about GM (China) Investment Corp. Here in China, "GM China" refers to GM's web of Chinese business interests. As in "GM operates seven joint ventures and two wholly owned foreign enterprises and has more than 20,000 employees in China." The two WFOEs are said investment corp and a warehouse. All others are JVs. And the JVs are listed in the court document. The Investment Corp and the warehouse ain't. It's not possible to run a car manufacturer as a Wholly Foreign Owned Enterprise in China. A car manufacturer is viewed as a venture with strategic importance, and foreign ownership is limited to a JV. This is currently being discussed and may be relaxed. Currently bu yao, no good.