Saab Submitted To Chinese Water Torture
Saab’s white collar employees were getting blue in their faces from waiting for last month’s paycheck. Saab had to sell off slices of the company to pay workers who sit at home twiddling their thumbs. According to the always well informed Saabsunited (when it comes to good news), salaries were transferred today at 5pm. On to the next payday.
Meanwhile, things don’t look so good in China. In June, Saab signed a non-binding memorandum of understanding (MOU) with Chinese distributor Pangda Automobile and car manufacturer Zhejiang Youngman Lotus. This had been feted as the second coming of Christ over in Flagwavingland. Put your ear on the ground. Hear that sound? It’s the Chinese, dragging their feet.
As we all know, time is money and Saab has neither. Pangda’s and Youngman’s investment into Saab must be approved by the Chinese government. For that, they need an application to get a lengthy process going. One would think those applications had been filed months ago. If Chinacartimes is correctly informed, those applications still need to be written. Says CCT:
“They are likely to submit the feasibility plan for Saab case to NDRC within three weeks.”
Now this is China. “Likely to submit” means: “Maybe we will, maybe not.” And “within three weeks” means: “Don’t rush me.”
It also means: “Don’t come to us for more money, sorry, our hands are tied.”
According to the CCT report, “due to restrictive policies by the Chinese government, the two Chinese companies are not allowed to make more investments to save Saab at the moment.”
Ordering more cars also is out of the question. Says CCT:
“Pang Qingnian, Youngman’s chairman, said that they could not make further investment in Saab by buying vehicles, as Youngman has limited quotas for vehicle import, but he believes Saab could go through the difficulties through various financing means.”
Then, Pangda’s Chairman had encouraging words. Report CCT:
“Pangda’s chairman Pang Qinghua said that if the plan could obtain approval in two or three months, Saab’s financial problem won’t exist, but there will be crisis if the approval takes a longer period.”
You can bet that this approval will not happen tomorrow. The deal needs approval from at least three regulatory agencies in China, one of them the powerful National Development and Reform Commission (NDRC). This agency, and many other parts of the government are on record that they want just a few big car companies in China, and not more than 100 as it stands now.
In the unlikely event that the deal should be looked upon favorably, any approval will take a long, long time. The joint venture between PSA Peugeot Citroen and China’s Chang’an took a whole year to get all necessary official blessings. The fact that Chang’an is a state-owned enterprise, one of China’s largest automakers, and owned by government-owned China Weaponry Equipment, did not speed up the paper-shuffle. Imagine how long it will take when a car dealer and a small Chinese busmaker want to get permission for a ménage-a-la-trois with a walking dead.
The scuttlebutt amongst expat car-execs and expat auto-writers over a beer in Beijing’s Sanlitun bars goes like this:
- An ice age in hell is given better chances than an approval of the threesome.
- Pangda is thought to have written off any money sent to Trollhättan as advertising. Imported Saabs are thought to be too expensive and too close to much cheaper Buicks made in China.
- All bets in China are on Saab going under, which will save the all-important face . The government will have to deny nothing, Pangda and Youngman are spared the mission impossible.
- A bankruptcy will probably rev up interest in China. We hear the Chinese delegation was impressed by what they had seen in Trollhättan, and may want to bring parts of the factory to China on the cheap.
[UPDATE: The Swedish site di.se reported that “a major US investor plans to become part owner of Saab. Within hours, Saab denied the news. The speculation is that GEM, which funded Saab’s white collar salaries this month was pumping the stock (which it just bought yesterday) in order to dump it fast. -EN]
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The saga of SAAB is pure mystery. And Bertel's "Put your ear on the ground. Hear that sound? It’s the Chinese, dragging their feet", is pure poetry.
It doesn't make sense that GEM initiated the rumors of an American investor. Yes, the stock did surge for one day but the period of performance of the stock is for 15 days. If the American investor doesn't come through, the stock will fall again before the end of the period. Higher stock prices are better for Saab because they reap the rewards at the end of the period. GEM doesn't want to pay the higher price.