Doubt on China's forced auto ventures

Marketplace Public Radio, September 17, 2010

Drivers and passengers step out of their vehicle while stuck in traffic along the Airport Expressway in Beijing. (Frederic J. Brown/AFP/Getty Images)

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A story in the Wall Street Journal reports that China's government is considering plans to force foreign automakers to share cutting-edge electric vehicle technology if they want to continue manufacturing in China. Rob Schmitz reports auto industry experts say they don't believe it.

TEXT OF STORY

BILL RADKE: The Wall Street Journal today reports China could start playing hardball with foreign automakers. The paper says the government is thinking about plans to force those carmakers to share cutting-edge electric vehicle technology if they want to continue manufacturing in China. But some auto industry experts say they don't believe it.

Marketplace's China bureau chief Rob Schmitz reports.

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ROB SCHMITZ: The report quotes unnamed auto executives. They say China's government wants to force foreign automakers into joint ventures with Chinese companies if those foreign companies want to make electric vehicles in China. Industry insiders willing to talk on the record, though, don't buy it.

BILL RUSSO: It would be foolhardy to implement a policy that has restrictions on foreign investment.

Bill Russo helped run Chrysler's operations in China and now heads Synergistics, Ltd., a consulting firm in Beijing. He says even though China has the world's top commercial market for electric vehicles, it's way behind the West in terms of technology. He says China knows this kind of policy would cause foreign automakers to pack up and manufacture their most innovative technology elsewhere.

RUSSO: The reality is this is a global industry, this is a technological frontier that requires collaboration between domestic and foreign companies.

Russo -- and other industry analysts -- say circulating a draft proposal is a typical way China's government gauges industry opinion. He says it oftentimes has little to do with what's enacted.

In Shanghai, I'm Rob Schmitz for Marketplace.

罗威：中国车商应更注重挖掘品牌内在价值

Chengdu, September 16, 2010

Click here to view the original article published at auto.qq.com

[导读]首届全球汽车论坛于2010年9月16-17日在成都召开，腾讯汽车作为官方三大合作伙伴，在论坛现场进行全程跟踪式报道，并为您带来重磅嘉宾访谈。腾讯汽车独家专访了博斯公司高级专家罗威。

专访博斯公司高级专家 罗威

[腾讯汽车9月16日 成都报道] 首届全球汽车论坛于2010年9月16-17日在中国成都召开，腾讯汽车作为官方三大合作伙伴，在论坛现场进行全程跟踪式报道，并为您带来重磅嘉宾访谈。在16日论坛现场，腾讯汽车独家专访了博斯公司高级专家罗威。以下是采访实录。

腾讯汽车：您认为中国在入世后，对汽车产业有什么好处吗？

罗威：当然是有好处的。入世以来，中国的汽车产业提供了大量的就业岗位。

腾讯汽车：在中国众多的汽车产商中，多数厂商品牌发展的很快。您觉得呢？

罗威：汽车品牌的形象的是日积月累的，正如一位业内人士所说。随着发展时间的延续，它们的品牌认知与国际厂家比起来，差距逐渐变小。但同样也会面临诸如产品同质化等方面的挑战。因此各厂商应致力于建立自己的研发体系，研发适合不同市场的技术。但随着其发展时间的延续，他们会越来越有经验，因为汽车行业本来就是一个需要多年积累的领域。如何迎接挑战、做好相关工作，对于新兴技术领域，更是如此。所以可能还要再过20年，经历一两个发展周期，可能中国的汽车厂商会做得更好。

腾讯汽车：您刚才提到，品牌的建立依赖于对产品质量和技术的重视。中国的厂商只用了数十年就走过了你们用百年走过的发展道路，对于类似于狂飙式的发展速度，对您的中国同行，您有什么建议或忠告呢？

罗威：就像之前说到的一样，我认为中国公司应重点发展那些和其品牌相关的领域，而不应贪大求全，要做产品的创新者和技术的引领者，要专注于自己的领域，积累经验。并且还应该将品牌含义清晰地传达给消费者，和别的品牌区分开来。

专访博斯公司高级专家 罗威

腾讯汽车：我们知道中国的汽车产商，像吉利和奇瑞，在品牌建设上花了很多功夫，像它们就将其产品划分成四个独立的品牌，这被视作是一种品牌保护战略。而与此不同的是。美国的厂商却都纷纷出售其品牌，对此你有何看法？

罗威：要创建一个品牌不是那么容易的。中国厂商其实应研究下如何才能挖掘品牌内在意义和维护其形象。如果上面的这些做法都是专注于一个品牌的话，这就很好。但如果要同时维护四五个品牌的话，那就太难了。所以我觉得要创建一个品牌的话会很容易，但要持续不断的进行品牌的定位并将其传达给消费者，就太难了，尤其是对那些没有经验的公司。

版权声明：本文系腾讯汽车独家稿件，版权为腾讯汽车所有。欢迎转载，请务必注明出处（腾讯汽车）及作者，否则必将追究法律责任。

GM Eyed Hong Kong IPO Listing, SAIC Interested In Stake

The Truth About Cars, August 27, 2010

By Edward Niedermeyer

From a week deep in our “How The Hell Did We Miss That” file comes a Reuters report that shows GM considered floating its IPO on the Hong Kong Hang Seng index. GM’s interest in a Hong Kong float has obvious roots: the company is extremely well-positioned in China, where high savings rates and the prospect of steady local sales growth could have helped bring in both private investors and GM’s partner firms. But according to a Reuters source, GM rejected the idea because it would have delayed the IPO past its Thanksgiving deadline

I don’t think signaling goodwill toward Asia is likely to be a significant enough argument for all the cost and complexity. I don’t want to overstate the cost and complexity but it’s not insignificant

But another issue in GM’s decision had to be the possibility of political blowback: though a smaller IPO risks a smaller payback for American taxpayers’ investment in GM, if a Chinese firm ended up with a major stake in GM, opponents could well have charged that the bailout resulted in a giveaway to foreigners (as was the case with Fiat’s takeover of Chrysler). And the role of politics in GM’s IPO planning should not be underestimated. According to a Reuters source, GM’s listing on the Toronto stock exchange is of no real value to the IPO, but

It’s a big thank you to the Canadian government for their role in supporting GM… There’s no logic behind listing in Toronto other than the political factors — none

Meanwhile, the New York-Toronto listing might not prevent a major Chinese ownership stake in GM post-IPO. Hu Maoyuan, chairman of GM’s Chinese partner SAIC, tells the FT that his firm

will watch GM’s IPO closely, and think carefully if we should purchase the shares or not.

SAIC recently bought out the controlling stake in its GM Shanghai joint venture with GM, and took over GM’s Indian operations. This partnership makes SAIC the most logical foreign investor in GM, but once again politics may limit SAIC’s involvement in the offering. Bill Russo, head of the Synergistics auto consultancy in Beijing explains

It becomes an emotional issue that somehow the identity of GM would be transformed from a North American-centred to an Asian-centred company… But that is happening anyway – the global centre of gravity of the auto industry is shifting to Asia

Another anonymous investor adds

I am absolutely certain they would love to have a share . . . but they do not want to upset the US about this.

On the other hand, the early days of GM’s IPO could see some US government-spurred irrational exuberance, and when reality sinks in, SAIC could well end up buying a big GM stake off the open market. After all, once the government releases its shares, it loses its ability to pick nix possible buyers for political reasons. Though GM has anti-takeover rules in its new Delaware-based corporate structure, an acquisition by a partner like SAIC would be considered friendly. And, in many ways, common sense. Though GM’s IPO may not immediately lead to a Chinese ownership stake, greater Chinese ownership of the bailed-out firm seems extremely likely over the medium-to-long term.

Click here to view the original posting on thetruthaboutcars.com

Posted in Alliances, Bailout Watch, China, High Finance, Industry, News Blog
Tagged as alliances, Bailout, China, GM, High Finance, Industry, ipo, SAIC

China Automotive Trends Online Seminar

September 29, 2010

A GlobalAutoIndustry.com Online Seminar to assist you with doing business in or with China.

• Online Seminar to be held on Wednesday September 29 at 10:00am EDT (Detroit time)
• Attend 1-hour seminar on your computer, 'live' via Internet
• A 40-minute presentation is followed by a 20-minute online, interactive 'Q&A' session
• Cost: $59 per person - $99 for two persons attending - $129 for three persons attending
• Attend this Online Seminar + any 4 other upcoming Online Seminars for only $179. (5 total for $179)
• To register, click on Register Now! link at bottom of this page.

Topics to be covered:
Taken collectively, it is clear these trends signal a shift in the global center of gravity towards the east. The dramatic shifts that have occurred over the past year in the structure and brand portfolios of the vehicle manufacturers are simply the early stages of a process of asset reallocation and global realignment that will unfold over many years. These trends are reshaping the brands, products and global footprint of those who hope to prosper in the 21st century automotive industry. Indeed, China has taken center stage in the battle for global auto industry dominance.

1. Policy-driven Consolidation of Chinese Vehicle Manufacturers

2. Global Redistribution of Assets by Non-Chinese Companies to Capture China Market Growth

3. Acquisition of Foreign Assets and Key Development Competencies by Chinese Companies

4. China's Investment in New Energy Vehicles and Related Infrastructure

5. Utilization of China's Automotive Capacities for Global Expansion

6. Hyper-Competition Across the China Automotive Market Segments

7. China Vehicle Manufacturer's Push to Build Brand Equity

8. China's Rapidly Changing Demographics and Growing Demand in Lower Tier Cities

Our Guest Speakers / Presenters
The Online Seminar guest presenter is Bill Russo (see Speaker's Bio below).

Who Should Attend
This Online Seminar is for foreign-based companies doing business in or with China.

Event Info

September 29, 2010

10:00 am to 11:00 am - Detroit time
16.00 hrs. to 17.00 hrs. - Brussels time
22.00 hrs. to 23.00 hrs. - Shanghai time

Pricing

Your price: $59 per person.

Special Offer: Multiple Attendee Offer

Your price: $99 for 2 attendees
Your price: $129 for 3 attendees

Your price: $155 for 4 attendees
Your price: $179 for 5 attendees.

Attend any 5 Online Seminars for $179!

Please note:
Please note that all events are for automotive suppliers and OEMs only. Select Global Expert guests may also attend at our discretion. If you have any questions whether you or your company is eligible, pleasecontact us.

Register Now!

China Automotive Trends Webinar: Sept. 29, 2010

View more documents from Synergistics Limited.

Russo Hosted Panel Discussion at Global Automotive Forum

Chengdu, September 16, 2010

Bill Russo hosted a panel discussion at 11:45am on September 16 at the Inaugural Meeting of the Global Automotive Forum in Chengdu.

The panel topic is "The Battle of The Brands" and the panelists included:

• Bjoern Hauber, Vice President Sales and Marketing, Daimler Benz China
• Ivan Koh, Vice President Sales, BMW China
• Wei Jianjun, Chairman, Great Wall Motor Company, People’s Republic of China
• Cao Chuande, CEO, Sichuan Shenrong Automobile Co., Ltd., People’s Republic of China

Chinese Press Coverage of panel discussion:

专题讨论：中国企业如何确立自己的品牌

http://auto.qq.com/a/20100916/000191.htm

Global Automotive Forum - Chengdu Sept 2010

View more documents from Synergistics Limited.

Geely first-half earnings rise 35% on uptick in car sales

China Daily, August 26, 2010

SHANGHAI - Geely Automobile Holdings Co, whose parent company this month completed the biggest overseas acquisition by a Chinese automaker, boosted profit 35 percent in the first half as car sales rose.

Net income increased to 804.8 million yuan ($118.4 million) or 0.0996 yuan a share, from 595.9 million yuan, or 0.0893 yuan, a year earlier, it said in a statement to the Hong Kong stock exchange on Wednesday. Sales at the listed unit of Zhejiang Geely Automobile Co rose 55 percent to 9.24 billion yuan in the same period. Geely, maker of the Kingkong compact car, expects sales to rise 27 percent to 412,000 units this year even as growth declines in the world's largest auto market, the company said on Aug 19. Auto sales in China have been rising at a slower pace since April as inflation erodes disposable incomes and government measures to cool down the economy weaken demand.

"Geely and other domestic local car companies have to shift to building brands and establishing their reputations in order to retain customers, not just attract first-time customers," said Bill Russo, a Beijing-based senior adviser at Booz & Co. Sales growth has slowed as the government has reduced financial support for new-car buying, he said in an interview with Bloomberg Television interview on Tuesday. Geely's parent bought Sweden's Volvo Cars for $1.5 billion earlier this month, after a doubling in profit last year allowed it to expand overseas.

Car buyers are returning after high summer temperatures kept them away from dealerships in July and August, An Conghui, Geely's executive vice-president, said at a conference in Ningbo, Zhejiang province, on Aug 19. An forecasts the nation's industrywide vehicle sales to reach 16 million this year. "We usually see explosive growth in September, October, until the end of the year," he said.

China's July car sales to dealers rose at the slowest pace in 16 months. Wholesale deliveries rose 13.6 percent to 946,200 last month, compared with 19 percent growth in June, the China Association of Automobile Manufacturers said on Aug 9.

Geely sold 227,200 vehicles in China during the first seven months of 2010, 34 percent more than its 169,170 deliveries a year earlier. The company's sales numbers fell 11.9 percent in July, the first decline since January 2009, Steve Man, an analyst at Samsung Securities Co Ltd, wrote in an August 11 report. July's sales "underperformed the industry by a significant margin", Man wrote, predicting Geely will lower its full-year sales target. The automaker, founded by Li Shufu, sold 325,413 vehicles in China last year, according to a filing to the Hong Kong stock exchange in January. China's auto sales growth will increase more than 10 percent next year from this year's total, Ye Shengji, assistant secretary-general of the China Association of Automobile Manufacturers, said in Ningbo.

Bloomberg News

The GM Volt in China: (Price) range anxiety?

Financial Times, August 31, 2010

By Patti Waldmeir in Shanghai and John Reed in London

As General Motors announced the arrival of its long-awaited Chevrolet Volt plug-in electric vehicle in China, there was a feeling that the age of the electric vehicle may finally have dawned.

The Volt - which will be sold in the US from the end of this year, and in China next year - will be among the first in a wave of mass-produced electric cars powered by lithium-ion batteries from global automakers. It’s as if Henry Ford and Thomas Edison got together to design a car: posthumously. But will anyone in China buy it?

(Price) range anxiety?

GM says the car is the world’s only “extended range” electric vehicle, taking away the postmodern malaise known as “range anxiety” (fear that your car will run out of electricity in the middle of nowhere). Volt can run 60 kilometres on its electric battery - far enough to cover most commutes, GM says - and 450 more on its petrol-powered “engine/generator”, GM says. Bill Russo, auto analyst and former head of Chrysler in China, says the Volt “has the potential to be the first true high volume electric vehicle to launch to date”.

But despite all the razzmatazz at today’s Chinese launch of the Volt, the automaker is far from sanguine about initial sales in China. Detroit will not say how much Volt will cost in China, but in the US, the price is $41,000 (less a $7,500 tax credit).

A plug-in without any plugs

In China, where the government is super-bullish about the potential for such vehicles as a way to save energy and improve the environment, the Volt will not qualify for a subsidy (at least according to current government regulations). GM officials admit candidly that only wealthy Chinese, eager to make a statement about environmental awareness, are likely to buy one.

Chinese buyers can save about $2,000 a year on petrol costs, GM says, plugging it into the wall at home at night to recharge. But many Chinese car owners live in high rise apartments without a convenient wall socket; and if they have to pay the equivalent of $41,000 for the pleasure of owning a car they need to take down the road to recharge, they may well decline.

Cleaning up

Meanwhile Chinese carmakers are rushing to produce their own forms of electrical propulsion - aiming at price and quality levels well below the Volt. Eventually, China could become the world’s leading producer and market for electric vehicles, auto analysts believe, because of its low car-ownership rates and large battery manufacturing capacity, as well as its government’s desire to reduce pollution and improve energy efficiency.

China recently launched a pilot programme in five cities comprising hefty Rmb50,000-60,000 subsidies for buyers of electric cars and substantial investment in recharging infrastructure. Beijing plans to have 5m clean energy cars by 2020.

But Li Shengmao, analyst with Shenzhen-based China Investment Consulting Corp, says that while he is optimistic about the electric vehicle market in China, he thinks the market share for such vehicles will not surpass 2 per cent in the next five years. And though Volt may be early to bid on that tiny share of the market - it will be far from the last.

Click here to view the original article at FT.com