BMW Flirting With SAIC. Happy Couple May Produce 7-Series

Bertel Schmitt
by Bertel Schmitt

BMW is talking to China’s 800 lb gorilla SAIC about producing BMW’s luxo-barge, the 7-series in China. This according to Bloomberg who has it from Dongfang Daily, who heard it from an unnamed source at SAIC.

BMW and SAIC had been talking about a joint venture three times in the past, says the Chinese paper, but noting came of it.

If this isn’t one of those Chinese rumors that are floated on one day, and denied the next, then this could be interesting in several respects.

One, BMW has a joint venture in China, with Brilliance. Brilliance hasn’t been doing so, well, brilliantly. In the first half of the year, Brilliance racked up losses to the tune of 9b Chinese Yuan ($1.3b). Its homegrown department has been in the reds for years as R&D costs mount and high-flying export plans falter. If BMW were to tie the knot with SAIC, this wouldn’t automatically mean the end to BMW/Brilliance. Polyamory runs rampant in Chinese joint ventures. One classic example is Volkswagen. They have a joint venture with FAW in the North and with SAIC in the South. Both are bitter rivals. VWs are sold through three different sales channels: FAW-VWs through FAW-VW dealers, SVWs through SVW dealers, and imported VWs through a small network of import dealers.

Two, at SAIC, the 7-series BMW would collide with a number of other joint ventures. VW, as mentioned, and GM being the biggest. Again, nothing unusual in China. German car makers may not let other brands drive past the gates of their plants – in China, they live in (supposedly) perfect harmony with their biggest competitors.

Three, a Made in China 7-series may not go down too well with China’s well-heeled. If you play in that league, you want the real, imported thing.

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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  • Fincar1 Fincar1 on Nov 02, 2009

    I'm reminded of Japanese pickups and pickup boxes being shipped separately into the United States and then reassembled. (Sometimes this resulted in the cab and box coming from different paint lots.) I also remember someone saying that cars shipped by sea would have the bumpers removed so the crate could be smaller. (I suppose the bumpers would be under the car.) Would this simple step qualify the shipment as parts, rather than an automobile? I'd say it depends on the specific language of the tariff involved.

  • Beemernator Beemernator on Nov 02, 2009

    When the Chinese produce an E39 clone, you can color me happy. But it must be a real clone, down to every detail and using the same materials. Except for the cooling system - feel free to replace the plastic with heat resistant metal. Ah yes, the power of dreams...

  • Stingray Stingray on Nov 02, 2009

    @Kristjan Ambroz I don't know about BMW 7 series being produced in other countries, but what you proposed doesn't make sense. My experience here in Venezuela is that a CKD car comes completely disassembled. You have to set up a body and paint and trim shop to get it together. An SKD car, as we assemble in this factory, is an welded and painted body to which the trim/mechanicals are installed. How is done depends a lot on local tariff/industry policy regulations.

  • Joeaverage Joeaverage on Nov 03, 2009

    Maybe I'm wrong but isn't it terribly wrong-headed to teach the Chinese how to do EVERYTHING the west does well so that once they are well practiced and educated - they might out-do us and sell us their own products manufactured by methods they learned from us? Oh, perhaps the managers figure they'll be retired or dead by the time this comes back to bite us in the ass? We in the west BETTER get our ducks in a row of Asia will stomp us into the dirt under their shoes and out market, produce and deliver more stuff than we ever will. And we'll be trying to catch up. Of course the people here at the top won't care because they'll still be profiting through investments or business agreements with Asian companies. And they'll still be selling Chinese stuff to us in the big box retailers. No, I'm not xenophobic or anything. Just want to keep America rolling/selling/making good stuff so we have ways to earn livings without first slipping to third world status before recovering a few generations later.