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On December 3, Shanghai Automotive announced the suspension of its shares. In the announcement, Shanghai Automotive stated that the group company will release information on major asset restructuring. On the second day, SAIC officially announced that the Group will increase its shareholding in Shanghai GM by 1%, involving a fund of US$84.5 million at an annual interest rate of 11%. The former shareholder General Motors retained its right to repurchase this 1% share in the future. This means that the seats that Shanghai Automotive and General China actually have on Shanghai GM's board of directors will be changed from the original 5:5 to 6:5, and SAIC will get a controlling stake in the joint venture company.
Shares finally broke
On the evening of December 4th, after an industry expert heard of SAIC’s increase in holdings, the first reaction was: “A new era is coming!†The optimist said it was true, when most car companies are accustomed to Chinese and foreign parties 50: After 50 years of peer-to-peer equity ratio cooperation model, SAIC opened its precedent and became the first Chinese car company to cooperate with foreign partners by increasing its holdings in the joint venture.
For this increase, Li Zhenghui, general manager of Shanghai General Public Relations, said that SAIC Shanghai GM is a sign of deeper cooperation between SAIC and General Motors, which is certainly beneficial to Shanghai GM, a joint venture company. First, the two sides can deepen cooperation based on the experience and achievements of previous successful cooperation. Second, both parties can jointly expand the Asia-Pacific market in the future, which will contribute to the internationalization of Shanghai GM. She stressed that the 1% shareholding change will not have any material impact on Shanghai GM's development strategy and daily operations.
Indeed, as Li Zhenghui said, as a fairly mature joint venture company, both SAIC and GM have a very clear attitude when dealing with their joint ventures. How can Shanghai GM grow better and faster under the existing growth model? It is the general direction of mutual attention of investment parties. The cooperation for the joint venture company, the future business imagination is very big.
However, the fact that the blind people see the other is that, through this increase in holdings, the previous "shakeless" joint venture stocks have now been broken by SAIC compared to the restrictions. In the future, for other joint ventures, except that China can increase its stake, Will foreign shareholders increase their stakes? An industry source said: "Although the current joint venture company regulations do not include this clause, but the rules are broken, smart foreign car makers will surely convince decision-makers to change the current mandatory joint venture ratio structure."
This kind of speech represents some people’s views on this landmark event. From the current situation, although GM currently does not have such a condition, the announcement in black and white reads “The original shareholder General Motors retained its The right to purchase this 1% stake, then, if we want to more enjoy the right to speak and profit share of the joint venture company, it is believed that the price that SAIC Motor will open at that time will not be lower than the $84.5 million it tripled.
Universal springboard
There are two more compelling news that came out at the same time as the December 4 announcement. News 1: Shanghai Automotive Group Co., Ltd. and General Motors Corporation announced that they will establish a Shanghai Automotive Hong Kong investment company in accordance with the 50:50 ratio.
In this regard, GM Shanghai Automotive Hong Kong Investment Corporation will become a new platform for investment cooperation between Shanghai Automotive and General Motors. Both parties tried to use GM’s existing assets and networks in Asia to produce and sell competitive new products under the leadership of Shanghai GM, Pan Asia Automotive Technology Center and SAIC-GM-Wuling, and to introduce a mature business model for both companies in joint ventures. Expanding business in emerging Asia.
Using equity to exchange back certain funds to support the rumored “Shanghai GM Hong Kong Investment Company†may be the direct cause of GM’s sale of Shanghai GM’s equity.
Whether at home or abroad, the significance of the "emerging markets" contribution to Shanghai GM is self-evident. In the domestic market, the “emerging markets†in the second-tier and third-tier cities in the central region, southwest, and northwest China will be developed with mid- to low-end models featuring the Chevrolet brand. The upcoming Chevrolet new Sail will be just the beginning, followed by SAIC-GM-Wuling. Bringing its Wuling brand to the domestic low-end compact and economical car market.
And overseas, this "emerging market" will start with India. In 2008, Suzuki Motors, which is based on low-priced models, sold more than 600,000 small cars in the Indian market, which is 10 times that of GM's sales in India. If GM wants to develop the Indian market, it must pass Shanghai GM and SAIC-GM-Wuling. "Hong Kong company" will undoubtedly become a good financing platform for future business development.
After General Goes out of the game, there is still a backhand. On December 4, foreign sources disclosed that General Motors had purchased 49.12 billion won of all new shares issued by GM Daewoo, and GM Daewoo said it had raised funds through its major shareholder, General Motors. It can be imagined that currently for GM, there is bound to be an inextricable link between Daewoo’s acquisition and the purchase of 1% of SAIC’s previous equity.
Industry sources speculate that after Daewoo's fall, General Motors will transfer its research and development tasks to China. But in the end, General Motors chose to save Daewoo and maintain the R&D structure. So we can see the universal heart.
Before and after the clues are connected together, people still see the more substantial meaning behind the incident. As a commercial animal, anyone will think for themselves a little more. GM already has the Shanghai Pan-Asian Center and still has to protect Daewoo; SAIC has a great deal The domestic market also needs a boat to go to sea. So it seems that SAIC and GM have retreated one by one.