For a while, GM has been trying to get back the crucial 1 percent share in the GM/SAIC China joint venture. That share had been sold when things were dire. Books were written about it, and Ed provided an executive summary. Now, China Daily heard from SAIC. “Mei wen ti!” (No problem.) SAIC is ready to hand back the share —- if GM finds a way that allows Shanghai GM’s revenue to be included in SAIC’s books. Uh-oh!
Confucius says: “Mei wen ti, da wen ti.” (No problem, big problem.) China Daily explains it:
“Under Chinese accounting rules that came into effect in 2010, a subsidiary’s revenue can be reflected in the books of the parent only if the parent is the majority shareholder.
That means that if SAIC, now with a 51 percent stake in Shanghai GM, cannot show it has control in one form or another, the revenue generated by the venture cannot be counted as part of its overall revenue.”
So basically, what SAIC is saying is: “Look, GM, we’d love to. But the bloody Chinese government and its rules. I’m sure you understand.”
According to the report, both sides had been searching for a solution since before the share was signed over in 2009. No solution has been found so far. The search continues.
What’s wrong with letting the revenue be included in SAIC’s books?
Nothing. But the only way they are allowed to do that is with the majority.
I’m not an accountant.. but why don’t they just make the rule that the sales can be reported proportionally? 49% to GM, 51% to SAIC. (I know, the lawmakers make the rules…)
Of course they’re going to argue over who reports that profit. I’m guessing that the profits from the Chinese portions of GM are likely the highest (% wise) of any part of the company.
You report what you get into your pocket. Does the amount of profit GM actually get change either way?
See Buickman’s comment under this one. I am one of the people who will be very shocked if GM isn’t a completely owned subsidiary of a Chinese coorporation by the end of the decade.
something tells me that 1% is going to mean a whole lot in the future, coming into play when GM becomes a Chinese owned corporation. look for it by 2020…the Year of the Rat!
Maybe then the taxpayers will finally get all our money back, for being forced to “save” GM in the first place…