The story “Daimler invites BAIC cross shareholding” (http://www.ft.com/cms/s/0/4ab2b2de-510e-11e3-9651-00144feabdc0.html) appeared buried in the deep recesses of the Financial Times Second Companies Section last week. As the Financial Times has become associated with Regime change in its analysis of China – i.e. nothing can succeed without the removal of the Single Party State and its replacement by Western Enlightenment, Parliamentary Democracy and Western Human Rights – it has become less of a must-read for those interested in the phenomenal changes of China and its impact on the world. It sees China as a slowing giant built on cheap labour – watch and see FT!
Occasionally a nugget can be found and this is one. Let’s hope more appear as they centre their approach to China again.
In the story, there is a report of Daimler leading the way in potentially buying a small stake in their Chinese joint venture partner. Later in the story the paper cannot resist taking a snipe at China suggesting they have failed in their development of the car industry – they have only built the biggest car market in the world and mostly on foreign capital, and stand poised to transform the global car industry with innovation – technological and structural. By keeping some companies out of joint ventures they think China has made a mistake. They always put some in and keep some out to retain independence of choices.
This story of Daimler buying a small stake in a Chinese partner is supposed to signal a takeover by Daimler of its Chinese partner. Possible. But also possible and not contemplated is the prospect of the joint venture merging with Daimler to give China a sizeable shareholding and create a unique Chinese western multinational.
Whether it happens here or not, this is the model for HSBC and many other multinationals seeking to address the China global challenge. Some may have no option, so get used to Chinese meals in the 50th floor Dining Rooms.
It is the logical next step in China integrating with the world. To enable its majors to develop mergers and cross-shareholdings with its counterparts. The first will be those who are most benign. It could have been Celanese but they forswore such a move 10 years ago when we proposed merging their global tow business with the Chinese partners in a new global IPO.
But our perception of the future of merged IPO’s will happen and it may be the car industry will be one of the first.
But what the FT misses badly is that the Chinese car industry is the only nation to have a pooled R and D effort for all its car manufacturers together. So who will likely have the big breakthroughs in alternative cars? Probably China. So if I was a major car Chairman or CEO, I would be developing a very close relationship with my Chinese partners and talking mergers. Detroit and Obama could have gone that road but they prefer TPPA and EU-NAFTA.
Daimler invites BAIC cross shareholding
By Tom Mitchell in Beijing
Read the complete article here: