China Has Eyes On Volkswagen

Bertel Schmitt
by Bertel Schmitt

The power struggle between Wendelin Wiedeking of Porsche and Ferdinand Piech of Volkswagen has attracted other suitors. The German magazine Focus reports that three additional bidders are interested: two sovereign wealth funds (read: goverments which are tired of investing their money in T-bonds) and a hedge fund. The nationalities of the sovereign wealth funds are interesting. One is the Russian fund and the other is Chinese, says Focus. The identity of the hedge fund is unclear.

Like the Sheik of Quatar, who has already made his interest known, the three new bidders are interested in an engagement in Porsche, and in Porsche’s package of Volkswagen options. This would give the successful bidder double access to Volkswagen: With the options, the bidder could buy more than a fifth of Volkswagen at a highly discounted price. With a share of Porsche, the bidder could partake in the 51 percent interest Porsche holds in Volkswagen. Or they could profit from a takeover play for Porsche by Volkswagen, co-engineered with the state of Lower Saxony (which holds 20 percent of Volkswagen).

In any case: These funds are not interested in Porsche because Porsche makes nifty cars. It is an interest in Volkswagen. For nobody would make this more sense than China. China and Volkswagen have been together since the early 80s—the Santana and the Jetta started China’s mass motorization. For a long time, VWs were more ubiquitous in China than in Germany. Both of Volkswagen’s joint ventures in China are state owned. For Volkswagen, China is where the growth is. For China, Volkswagen is where the technology is. On top of it, VW is the only large car company that turns a profit.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Flashpoint Flashpoint on Jul 05, 2009

    so...the Chinese strategy is to use slave labor to amass trillions of dollars and then buy out the foreign investors and competition? Where can we get slave labor from?

  • Stewart Dean Stewart Dean on Jul 05, 2009

    Thermodynamics/cosmology has the concept of heat-death, when the Universe runs down, there is no concentrated energy and the whole universe is at the same temperature. Somewhat in that vein, I have been for some 25 years been proposing that globalism is bringing us a wage death: that is, everyone except the insanely talented will be paid 25% more than the Chinese were/are...until wages everywhere are the same.

  • Niky Niky on Jul 05, 2009
    # Flashpoint : July 5th, 2009 at 1:24 pm so…the Chinese strategy is to use slave labor to amass trillions of dollars and then buy out the foreign investors and competition? Where can we get slave labor from? You had your chance. Too bad that Lincoln feller threw it all away.
  • Stingray Stingray on Jul 06, 2009

    Suitors?... I'd say ravens... Those 2 are going to really hurt both VW and Porsche in their fight about who has the biggest penis...