Since I’ve been writing for TTAC, I predicted that Chinese interests will eventually go for GM, if and when price and time are right. GM already sells more cars in China than back home. GM expects that huge business to grow by 10-15 percent next year. It stands to reason that China wants on (the) board. There has been talk about limiting the share of “foreign investors” in the GM IPO. “Foreign investors” of course are Chinese, and the true number of foreign investors interested in the GM IPO probably comes down to one: China’s SAIC, GM’s Chinese joint venture partner for 13 years now. And now it’s official.
SAIC “has reached out to General Motors Co GM.UL to explore the prospect of taking a stake in the automaker when it goes public this fall,” says Reuters, citing (count ‘em) a total of four people with knowledge of the matter.
Not to spook politicians and public too much, SAIC has expressed an interest in acquiring a “single digit” share in GM, said one of Reuter’s informants.
Because the SAIC contact with GM remains private and preparations for GM’s IPO are covered by strict U.S. securities regulations regarding disclosure, none of the sources agreed to be named.
Two weeks ago, Ed wrote: “Expect Treasury to publicize any limitations on foreign investment in GM’s IPO sometime “within the next couple of weeks.” And no matter how the bureaucrats rule, it won’t be great for taxholders. After all, foreign investors (particularly in China) have the motivation and means to invest heavily in GM, which would help boost the IPO price.”
Yesterday, that ruling came down. In an online posting made late Friday, Treasury said that the IPO would be open to a wide range of investors including overseas funds and U.S. retail buyers.
According to Reuters, “GM and its advisers also are making appointments to meet with sovereign wealth funds over the next few weeks to sound out their interest in committing to buy and hold major stakes as so-called “cornerstone investors.” One of the biggest and flushest sovereign wealth funds sits in China and belongs to the Chinese government. SAIC can get a “single digit” share, but if the Chinese government buys a “major stake,” soon we’ll be talking about real money.
Even with “foreign parties” interested in snapping up GM shares, don’t count on getting your tax money back soon. GM is determined to pay back taxpayers as quickly as possible, but the process could take “several years,” GM CEO Dan Akerson said on Thursday.
Watch for this to become a much bigger headline story as we get closer to the actual IPO. The fact is that this is going to play into the hands of those who argue that the US is so severely indebted to foreign (read: Chinese) interests that we’re going to start selling off pieces of the country. Since GM is technically owned by the federal government, this is going to lead to some messy political discourse in the coming months.
I can guarantee that the old slogan “What’s good for GM is good for America” is going to play into this, too.
It should also lead to a national discourse on whether a Chinese-owned GM is better for the nation than it would have been to allow the company to die outright two years and $60 billion ago.
The most important lessons are often the most painful. And pricey.
I’ve heard this so many times I’m not really gonna consider it news till the IPO happens and we see how much of a stake the Chinese grab. I really see it as not a question of if, but how much.
And when the Chinese buy GM, what does that mean for GM retirees? What does it mean for manufacturing in America?
Thank you Reagan Republicans for your trickle down economics. Our economy has trickled all the way down to China. CONGRATULATIONS!
And we in turn thank the Democrats and union members for the high taxes, bloated government, over regulation and union graft that made China look like an attractive place to do business when compared to the U.S. A hearty congratulations to you too! It takes a special group of people to make conservative business leaders look to Communists to keep their businesses running profitably.
+1 caboaz. I’d give you more credit, but forraymond’s ilk would then tax you on it.
I thought this web site was about cars, but since your on the topic of political parties. Both of them sold out the middle class as far as I’m concerned and they both kowtow to Wall Street.
The Germans have unions and they have gotten by making high value products, which other people pay a premium for. Other than cutting-edge, defense related hardware to include aircraft, how many high value products did our corporate MBA demigods have us make, which could be exported?
By the way, I recently heard some news blabber say we are $17 Trillion in debt. If it’s true then the US is pretty near bankrupt. Get used to it.
Just as long as we get a good price for it. Do you know anybody who wants to buy Chrysler?
Me. I’d buy shares in that thing. Heck, maybe next year, if the IPO is done after July, I could be able to.
Stop the protectionism already. China will eventually own major portions of US businesses, just how they already own much of our debt, so let ’em buy however much they want of GM and be done with it.
Fair Trade is not PROTECTIONISM. It is also not Free Trade.
If SAIC eventually do buy GM it will be interesting to see if MG returns to the USA.
If done right, you don’t need tanks and armies to occupy.
So it’s OK for GM to own Opel, or Daewoo, and for Ford to own Volvo or a part of Mazda — but it’s not OK for SAIC to own a part of GM?
Just so I understand, international investment rules should be set up so that US companies can invest abroad, but foreign companies should not be allowed to invest in the US, right? (Or are we just looking for a special exemption against the Chinese?)
Protectionism is not how the US economy was built.
Last I checked, global pundits aren’t too concerned with Germany, South Korea, Japan, or Sweden launching an all-out assault to usurp the US position as the dominant world superpower within 30 years.
Tell me th009, why should anyone in America make it easier for China to do that?
Or would allowing the ChiComs unfettered access to GM technology be a clever ploy to insure their tanks and aircraft fall apart on the battlefield?
@Rob Finfrock, I guess free trade is just a charade to be kept up as long as it suits the US plans for world domination, then. Thanks for clarifying.
Maybe this will teach the Chinese to stop buying US government debt as well: having the Chinese own that is surely also bad for the US world hegemony.
th009, I have no problem with US hegemony, for this admittedly self-serving reason: so far, I’ve been among those on the winning side.
But can you tell me with a straight face the world would be better off with China in control?
@Rob Finfrock et al: Whenever I hear about the “Chicom tanks” I have a simple question: When was the last time China invaded another country? Usually, silence ensues.
China is a peaceful country. They have enough land, they don’t need more. If you want to make them grumpy, then threaten their own sovereignty.
Tibet?
Bertel, I respect your opinion and unique perspective. As you know, DenverMike already answered this question in his post above — China doesn’t need to invade the US. They’re doing a fine job of taking over this country without a single shot fired. As we seem to be happily allowing them to do it, I say it only serves us right to have to deal with the consequences.
When I made the “China tanks” comment, I was thinking of an exchange on our local talk radio show last week, in which the host was lamenting the enormous amount of US debt and, in particular, how much is held by China. “How do we climb back from that?” the host asked rhetorically. “There’s no way we can ever pay that back.”
A caller had what may be the only answer. “We destroy their ability to collect.” Of course, this isn’t a realistic option… which leaves the US with precisely no alternatives. China’s coming. We can’t stop them. But, again, why make it easier for them to absorb what little US industry still available?
I’m just glad I don’t have children. I wouldn’t want them to grow up in the kind of United States we’re leaving for them.
<blockquote>Usually, silence ensues.</blockquote>
Besides the obvious example of Tibet: India, Vietnam, and (depending on who you ask) Russia has been invaded since 1949. There’s also propping up the Burmese junta, being the chief reason half the Korean peninsula is enslaved, and serially enabling Iran’s nuclear weapons program.
I don’t think the US record is much better. Even after the Vietnam war there have been multiple invasions (Grenada, Panama, Iraq etc). And I recall that the US has not had any trouble propping up friendly juntas, either.
The pot calling the kettle black, methinks.
Did I ever suggest in my comments that the U.S. does have a better record? The question asked was about China, and it was answered. The United States is not the topic.
How about SAIC pay back the Taxpayers 62 billion in gold coins and we help them relocate RenCen? Then they can bail out Government Motors the next time.
The UAW working for the Communist Chinese. What could be more apropos?
Oh, to be a fly on the wall during the first round of contract talks…
At least we wouldn’t have to listen to them whine about the evils of capitalism anymore. Why, they’d be working hand in glove with their international brothers of labor in the Communist Chinese party! It’d be like a homecoming!
I’m sure their new communist managers are okay with “job banks” where people are paid for not working and workplace rules like the guy holding the wrench is not allowed to touch a hammer, etc etc. This is the kind of union efficiency that is making China the economic powerhouse it is today, I see no reason it would change once they own GM.
I can’t wait till it dawns on people that the US, owing a trillion dollars to the Chinese, is now selling off taxpayer owned assets to the Communist Chinese government. Weren’t the domestic automakers “national treasures” that just HAD to be saved for the good of the country? lol I guess we should have asked what country Obama had in mind…