For decades, U.S. auto makers have held stakes in vehicle manufacturers throughout the world. They range from joint ventures to alliances to wholly owned subsidiaries. They are as far-flung as Australia, Russia and South Africa and as close as Canada and Western Europe.
Yet the rules of global engagement for American big business appear to be changing. Look no further than the recent Dubai-U.S. port debacle to confirm that.
One can’t help wondering if Americans would issue the same hue and cry if Dubai was looking to buy General Motors.
Would shareholders take the money and run? Would President Bush say it was a good thing? Would Americans sound the alarm that a national institution was being taken over by foreign interests?
Yet, the notion isn’t that far-fetched. During a recent Society of Automotive Analysts conference held in Detroit, the specter of a Chinese company buying GM came up during a panel discussion.
Given the auto maker’s financial distress over U.S. legacy costs, a former GM executive in the crowd provoked laughter when he asked rhetorically, “Why would they want to?”
And then again, why not? One only need look to the successful partnership between GM and Shanghai Automotive Industry Co. that has helped push GM brands to the No.1 best-selling vehicles in China.
SAIC is huge, well connected and the darling of the regional government, which owns half the company. It is focused on a global brand and gearing up rapidly to produce one.
The company’s longtime relationship with GM is one of trust and shared business practices; it has a large investment in South Korea’s GM Daewoo. GM needs cash and has more production capacity than it knows what to do with.
OK, so maybe SAIC couldn’t or wouldn’t want to buy GM’s U.S. operations outright, but what about a partnership?
Can you say, ‘DaimlerChrysler?’
It should come as no surprise that Chinese auto makers have ambitions to become global companies. Selling cars in the U.S. is a short-term goal, a matter of pride that proves they are “worthy,” as one speaker, John Harmer, chief operating officer of China’s Geely Automobile’s U.S. unit, points out.
But to really have arrived, the Chinese, just as the South Koreans and the Japanese before them, eventually will want manufacturing operations here.
Panelist Jack Perkowski, chairman and CEO of ASIMCO Technologies, which operates components plants in nine provinces in China, tells the SAA gathering that as tough, sophisticated and demanding as the U.S. market is, “don’t underestimate the Chinese.”
He believes it will take three to four years before Chinese vehicles have full acceptance in the U.S. market. Once that happens, he estimates it will take only four to five years for sales to reach 1 million units.
Chinese assemblers in the U.S.? Yes, agrees Rudy Schlais, retired president of GM Asia/Pacific, who has a consulting firm in China. “The capacity exists in the U.S.,” he says. “That may be a strategy folks are looking at. It has been discussed.”
