GM Officially Out Of Control In China
Everybody who’s ever worked in China knows that some things take some time. Nothing that is announced today, happens tomorrow. There are applications to be made, documents to be “chopped.” Sometimes, this process takes forever, as it seems to be the case with Hummer. Sometimes, things move a bit faster. Last December, we reported that GM would sell a crucial one percent of the 50:50 holdings of GM China to their joint venture partner SAIC to bring the shareholdings to 51 percent SAIC, 49 percent GM.
As China’s new year (that of the tiger) came around, China’s biggest automaker SAIC Motor Corp has won regulatory approval to acquire the crucial 1 percent stake in Shanghai GM, Shanghai Daily reports today via Gasgoo. The matter has been officially filed to the Shanghai Stock Exchange yesterday. It’s official now. General Motors officially has been relegated to minority shareholder in its key venture in the world’s largest auto market. SAIC is now calling the shots.
SAIC makes a charitable donation of $85m for the crucial 1 percent share. According to yesterday’s filing, the added 1 percent enables SAIC to consolidate the joint venture’s results into SAIC’s balance sheet. This makes the bargain price even more astonishing.
When the deal was announced in December, it also became public that SAIC had more or less given SAIC half of GM’s business in India. India is an important growth market. India had successfully kept China out of the country. The deal with GM gave SAIC, and by extension China, backdoor access to a strategically important market.
Again, the price of admission was very low for SAIC. GM basically sold half of their India business for anywhere between $300m to $530, by way of an investment vehicle still to be set up in Hong Kong, which will take over GM India. That money will go right back into the Indian operation, which hadn’t been doing so well.
For chump change, GM is giving up control of a very successful venture in the world’s largest auto market. For a contribution to keep the lights on in India, GM gives SAIC in China coveted access to a country they would not have been able to penetrate alone. While something of great value is practically given away, GM is asking tax payers in the U.S.A. and Europe for money to keep them afloat. Why aren’t they ask China for money for something China urgently needs and wants? What’s going on here?
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="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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You'll never loose money betting on GM executive ability to make the wrong decision at the right time. After all, their rare talents led the world's biggest and most quality car manufacturer to it's present position of building junkmobiles for the government.
I think we can stick a fork in Hummer now. http://jalopnik.com/5479428/gm-kills-hummer-officially http://www.autoblog.com/2010/02/24/hummer-gm-sale-tengzhong-wind-down/ And that sound you hear is Greenpeace celebrating.