Tag: foreign

Report: China tells foreign automakers they must build low-cost local brands

Filed under: China, Plants/Manufacturing

Chinese flagIf you want to do business in the Chinese market, you have to play by the rules set out by the Chinese government… and those rules are subject to change. Such is the case in the automotive segment, where officials from China are reportedly set to add some requirements for automakers that wish to update any contracts in an effort to build more vehicles in China.

Apparently, as much as 30 percent of any additional production capacity over what has already been agreed upon will be earmarked for the Chinese market, and that percentage of vehicles would have to be sold under a new Chinese brand name at a “low cost.”

It’s not necessarily more brands China wants, it’s intellectual property. “During 10 years of trying, China has become a big factory for foreign companies, and their Chinese partners didn’t get advanced technology. Through this industrial policy they would like Chinese carmakers to get IP in order to own this market,” said Lang Xuehong, automotive analyst with Sinotrust, quoted by Financial Times.

Will the scales fall in favor of more access to the lucrative Chinese market or will the desire to keep valuable intellectual property under the roof of the company that actually earned it through actual research and development triumph? We’ll see.

[Source: Financial Times – sub. req.]

Report: China tells foreign automakers they must build low-cost local brands originally appeared on Autoblog on Mon, 21 Mar 2011 17:31:00 EST. Please see our terms for use of feeds.

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U.S. to limit foreign investors in GM IPO?

Filed under: Government/Legal, GM, Earnings/Financials

GM CEO Dan Akerson - AFP/Getty

According to The Wall Street Journal, members of the U.S. Treasury are worried about General Motors’ upcoming IPO. They aren’t concerned for the automaker’s stock price, or how even how many investors may decide to buy into the company – they’re concerned about what country the money is coming from.

The Journal suggests that government officials are considering whether to limit or select which non-U.S. investors would be invited to be so-called “cornerstone” investors in GM’s IPO. Cornerstone investors are sought out to purchase and hold sizable stakes in a given company at a set share price. Said price is often lower than what the general investing public can secure, the theory being that the cornerstone investors’ presence (and the stability it implies) serves to drive confidence in the company. The fear is that there could be considerable political fallout if, say, some of those cornerstone investors turned out to be from nations like China. Either way, GM will need to firm up its investment plan fairly quickly if it is to allow enough time to court the ‘right’ cornerstone buyers.

As GM readies its IPO pitch, another key element in the company’s talking points will be its long-term stability – including a chief executive officer who plans to stick around a while. New GM CEO Dan Akerson has reportedly told the board that he’ll stay at the helm for two to five years – or perhaps even longer. The manner in which his compensation agreement is structured will likely include incentives timed to take effect over a period of years as a way to show investors that he’s serious about making a longer-term commitment to the automaker’s recovery.

[Source: The Wall Street Journal – sub. req. | Image: AFP/Getty]

U.S. to limit foreign investors in GM IPO? originally appeared on Autoblog on Sun, 05 Sep 2010 16:29:00 EST. Please see our terms for use of feeds.

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