Ssangyong/SAIC

[Atmos]

Interesting article about the takeover status quo:


SSANGYONG MOTOR UNION, SHANGHAI AUTO FIRM TO HOLD TALKS ON SALE

SEOUL, Oct 15 Asia Pulse - The labor union of Ssangyong Motor Co., which is being taken over by China's Shanghai Automotive Industry Corp. (SAIC), is to hold discussions with representatives of the Chinese automaker today on its demands regarding the acquisition.

The meeting, which comes just a couple of weeks before the planned signing of a final contract, is deemed a crucial factor in the sale as workers are poised to launch a full strike if SAIC rejects their job guarantee and other demands.

"We stand firm on our position that we will embark on a full strike if Shanghai Automotive chooses not to accept our demands," Lee Young-ho, a union spokesman, told Yonhap News Agency.

The union delivered a set of preconditions for the sale to SAIC in August, a month after the Chinese automaker was selected as preferred bidder for the 48.9-percent stake in South Korea's fourth-largest automaker.

Ssangyong Motor has been up for sale since its creditors bailed it out following the country's 1997-98 foreign exchange crisis.

The preconditions include guarantees of job security, expansion of production facilities and sales networks as well as increased spending on research and investment. Guarantees of independent management and the continued use of the Ssangyong Motor brand are also among them.

The Chinese automaker's president, Hu Maoyuan, has already promised to maintain and improve Ssangyong Motor's existing facilities and retain all workers after the takeover.

However, it remains to be seen whether SAIC will accept some of the union's tougher demands such as the limited transfer of Ssangyong Motor's technology to the Chinese automaker.

The transfer of Ssangyong's key technologies on engines and transmissions is known to be one of the main reasons for SAIC's interest in the South Korean firm. The Chinese company is also eyeing expansion of its product lineup to include sports utility vehicles, which Ssangyong specializes in.

SAIC has already finished due diligence on Ssangyong Motor and is in last-minute discussions with the South Korean automaker's creditors on completion of the sale.

Copyright © 2004 Asia Pulse Pte Ltd

[MGROVERnut]

I wonder if they will continue to call it SsangYong? MG sound snappier somehow..... :minxy:

[Atmos]

Why should the Chinese stick an MG badge at a car from Korea?

I think it´s never positive if a product pretends to be something that it isn´t. They should call it SsangYong, because the cars are SsangYongs and not MGs.

[MGROVERnut]

Why should the Chinese stick an MG badge at a car from Korea?

I think it´s never positive if a product pretends to be something that it isn´t. They should call it SsangYong, because the cars are SsangYongs and not MGs.

Why rebadge Daewoo's Chevrolet? Because most Brits proably prefer the sound of the name Chevrolet? I think it would be a good move all round to rebrand SsangYong cars as MG's. No one over here really takes any notice of SsangYong. Most of us seem to struggle to spell it, let alone say it. MG is a good brand, recognised throughout Europe, the question ought to be why continue with the SsangYong brand in Europe when no one takes any notice anyway? It would take SAIC years and lots of $$$$$$$ to build up the brand in Europe. Why bother??????? Furthermore an Americanised version of these cars could prepare MGR for an all out assault of the US market. Remember American's like their SUV's!

[Atmos]

Should MG stand for the kind of cars SsangYong makes? I don´t think so.

[JohnSwitzer]

Erm... I think rebranding SsangYong as MG would be several brand extensions too far :err:

John

[SteveChilds]

MGRoverNut, will you stop saying SsangYong should be MGs... I fail to see any logic in that whatsoever. Its like calling a Merc A Class Diesel an AMG model.

[Atmos]

New article about the status quo


SSANGYONG MOTOR, UNION START TALKS ON WORKER DEMANDS

SEOUL, Oct 19 Asia Pulse - The labor union and management of Ssangyong Motor Co. (KSE:003620), currently undergoing a takeover by China's Shanghai Automotive Industry Corp. (SAIC), sat down at the negotiating table Tuesday to discuss unionized workers' demands concerning the acquisition.

It is the first meeting between the two parties following SAIC's announcement on Friday that it will delegate negotiating power to Ssangyong Motor's management to deal with demands by the South Korean automaker's labor union.

In July, the Chinese automaker was selected as the preferred bidder for a 48.9 per cent stake in South Korea's fourth-largest automaker, which has been up for sale since creditors bailed it out following the country's 1997-98 exchange crisis.

A month later, the union delivered to SAIC a set of preconditions for the sale, including guarantees of job security, expansion of production facilities and sales networks as well as increased spending on research investment. Guarantees of independent management and the continued use of the Ssangyong brand were also specified.

During the meeting with representatives of the labor union last week, Jiang Zhiwei, vice president of SAIC, reiterated the Chinese automaker will retain all workers after the takeover and promised an investment package worth over US$1 billion.

However, it remains to be seen whether SAIC will accept some of the union's tougher demands.

The Chinese automaker has already conveyed to Ssangyong Motor's creditors its reluctance to concede to union calls for a larger role in key management decisions, sources close to the sale said.

Labor-management negotiations on the sale are likely to delay completion of the sale, which is slated for the month's end, the sources said.

SAIC has already finished due diligence on Ssangyong Motor and is in last-minute discussions with the South Korean automaker's creditors on completion of the sale.

Copyright © 2004 Asia Pulse Pte Ltd.

[Atmos]

Ssangyongs labor union seems to be satisfied with that what resulted from their demands:

SEOUL - The acquisition of Ssangyong Motor Co (KSE:003620), the fourth-largest automaker in South Korea, by China's Shanghai Automotive Industry Corp. (SAIC) was on the verge of going through, industry sources said Sunday. According to the sources, the Chinese automaker and Ssangyong Motor are scheduled to make a sales and purchase agreement on Thursday. The development followed the labor union and management of Ssangyong Motor resolving most differences last week surrounding working conditions in the wake of the acquisition. SAIC delegated negotiating power to Ssangyong Motor's management to deal with demands by the unionized workers.

[richierover]

maybe a new suv could be made using saic funding for both ssangyong and mg.

use a derivative of the 75 platform, and some mean mg sv styling and they could be onto a winner. plus i hope this saic link creates a mgr V8 engine for suvs and other

[Atmos]

Interesting background article

China: Ssnapped up
November 4, 2004 5:12pm

SAIC’s winning bid for South Korea’s Ssangyong Motors is only half the story

At the end of October Shanghai Automotive Industry Corp (SAIC) became the first Chinese car producer to take control of a foreign firm. In a high-profile deal, the company finally completed the purchase of a 48.9% stake in South Korea’s Ssangyong Motors for US$552m. Yet while the acquisition itself grabbed all the headlines it is only part of the story. The battle to win control, Ssangyong’s history in the industry, the plans SAIC now has for the company and its intentions to make other acquisitions to become one of the world’s top carmakers 15 years from now are far more critical signals of where China’s auto sector is going.

SAIC was not the only Chinese bidder for the Korean business, nor was it the highest. China has three main carmakers (SAIC, FAW and Dong Feng) and tens of smaller ones. Despite government hopes of a consolidation in the sector there are also a host of companies, big and small, hopeful of entering the world’s biggest manufacturing activity – and what was until recently the world’s fastest growing market.

The other main bidder for Ssangyong was Chinese state petrochemicals-to-noodle-shops business China National Blue Star. Blue Star, with a turnover of US$1.2bn in 2003 and assets of US$2.4bn, originally said it would pay up to US$1.5bn for a 55.4% stake in the ailing Korean business and then invest more than US$1bn in new production facilities, product research and development and the creation of a sales network in China. It planned to import more than 200,000 sports utility vehicles a year from South Korea.

By the end of 2003 discussions were at an advanced stage. Then, two issues emerged. First, as Blue Star began digging deeper into the South Korean business’s murky accounts it realised that the price it had offered was too high. Secondly, it became clear that the Chinese government was unwilling to give its consent to the deal.

Even in March this year Blue Star remained the preferred bidder with Ssangyong’s 27 creditors despite the fact that it was now only offering US$620m for a 51% stake. But by this time SAIC had re-entered the fray and had formed links with Ssangyong, via Shanghai Huizhong, an SAIC subsidiary. This company had started to produce vans in March 2004 under a technical licensing deal with the Koreans. Shortly afterwards, when SAIC was given formal government approval to conclude the deal, Blue Star’s fate in the contest was sealed. Although discussions with the chemicals business staggered on for a few more months, SAIC had won.

But what exactly has it won? Not a high-flying success in the global auto sector for sure. Ssangyong is South Korea’s fourth largest vehicle manufacturer, producing around 100,000 sports utility vehicles a year. In a market for 55m a year world-wide, this is peanuts. Even SAIC achieves six times that volume itself though its affiliates. With limited scale and questionable economics Ssangyong had also been through a series of crises already. After its debts ballooned, it had been swallowed up by Daewoo Motors following the regional financial crisis in 1998. But its parent then collapsed too when Daewoo Group entered bankruptcy in 1999 with US$80bn of debt. For almost three years Daewoo Motors and its subsidiaries floundered. Then, in 2002, most of Daewoo Motors was sold to America’s General Motors (with some additional investment from SAIC and Japan’s Suzuki). But the three affiliates balked at taking Ssangyong as part of the deal too.

Since then, the sports utility vehicle assembler, which employs 7,400 workers at its factory in Gyeonggi province, south of Seoul, has been up for sale. With debts of nearly US$1.3bn and a market capitalisation of only US$714m at the end of March 2003, Ssangyong was still not viable despite a healthy jump in sales and return to profit. It had too many models and was too small.

Ssangyong’s production capacity as well as its access to the South Korean market (it holds an 8% share) are certainly not the most important features of the deal to SAIC, though they are an added bonus. What is much more critical to the Chinese company is access to the South Korean firm’s knowledge of how to design and build vehicles, its understanding of how to achieve good quality levels and SAIC’s own ambitions for the industry. Having entered the Fortune 500 list of top companies in the world earlier this year, SAIC has made it clear that it wants to become one of the world’s top carmakers by 2020. To do this, it intends to start building its own brand of vehicles by 2007. Although it has had partnerships with both GM and VW for many years it has found it hard to acquire the necessary skills to achieve this. Ssangyong goes some way to fill that gap. As well as larger cars and sports utility vehicles, Ssangyong has experience in the development of engines and transmissions -- complex, scale intensive and critical components for any aspiring carmaker. Ssangyong also has export experience as well as distribution and sales outlets in Europe and elsewhere which can offer a springboard for SAIC’s international ambitions.

Even so, problems lie ahead. South Korea’s feisty unions must be dealt with and Ssangyong’s own ambitions for China will need to be tempered. The South Koreans see the deal as an opportunity for them to gain access to one of the most attractive markets in the world -- access which will allow them to export from Korea to China. That looks unlikely to fit with Chinese plans. Some financial concerns remain too. Like many South Korean businesses Ssangyong’s finances are opaque. Although the price SAIC paid for Ssangyong was in global automotive industry terms something of a snip, it was more than GM paid for the larger Daewoo Motor business. According to Bloomberg, SAIC paid a 47% premium on the shares it acquired, a hefty price tag for such a long-lame business.

Despite this, it seems that SAIC is making the right moves, consistent with its longer term goals. It is also considering an international listing of its shares, possibly in Europe as well as in Hong Kong and has plans to work more closely with Britain’s MG Rover Group (see Business China, October 11th, 2004). Most recently these involve the joint acquisition of Daewoo’s old plant in Poland as well as the idea that SAIC will eventually acquire Britain’s largest remaining carmaker. SAIC is visibly moving into a higher gear and Ssangyong will certainly add to its momentum.

Copyright © 2004 Economist Intelligence Unit

As far as I know much of Ssangyongs technology is based on old Mercedes technology. Not sure if SAIC can do with it what they want (transfer it to China).

[Diewaldo]

Yes, especially the engines have been built in licence from Mercedes (2,7 litre CDI etc.) I think the same is right for the transmissions, as far as I know these are even so from Mercedes.

The article proofs to be wrong in some crucial points. They paid a lot of money for some technology that:

a) Is built in licence from Mercedes-Benz
b) They can't use, because of a)