FAW interested in buying Chrysler

China’s number 1 car manufacturer FAW (First Automotive Works) has shown interest in buying Chrysler, according to this article in Forbes. Last week I already heard this story from a friend in the automotive industry in Beijing, but I sort of dismissed it as a rumour (there had been stories before that FAW would like to buy Chrysler, even when it was not for sale yet).

It would be another major take-over for a Chinese company, after Lenovo’s take-over of IBM computer division. For Chrysler it would be the second take-over by a foreign company in less than 10 years. When Daimler-Benz ‘merged’ with Chrysler in 1998, I was working in the Daimler headquarters in Stuttgart. The German and US cultures were more different than people originally thought, and it took a lot of time to change the company culture. Although I have left DaimlerChrysler almost 5 years ago and I am not too much involved anymore, I still feel it is not one company yet. That fact, and especially the huge losses that Chrysler is generating, now leads Daimler to finally get rid of Chrysler.

If FAW should take over Chrysler, the employees will be in for a big surprise. German culture is one thing, but Chinese culture is a whole lot different. And I wonder what FAW will do with Chrysler, because I don’t believe they will simply keep production in the US. Labor costs are way too high, and working with US labor unions won’t be something FAW is looking for. The Chrysler brand may be interesting, but it would be a high price to pay just for the brand. Chrysler’s technology is not state-of-the-art, although they have some good research and development facilities.

I am not sure if FAW will succeed though, personally I think a US company like General Motors will have a much better chance in take-over negotations. But FAW’s move shows that China’s businesses are emerging on the world stage. Now it is still the US, but soon Europe will be the next target. Thanks to many one-sided media reports, most people there still have no clue what is really happening on this side of the world. Soon they might be in for a big surprise as well.

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  1. Ik lees trouwens dat de Spill group weer goed bezig is, kreeg een persbericht: SPILL GROUP and GEE sign promotion contract for MMO

  2. The attention China has drawn from the western world mainly comes in terms of number–speed and scale. However, there is one point possibly missing from both sides, which is the questioning of “quality”. It is not the “quality” of products (I have no doubt about Chinese goods), but the quality of social system–operational efficiency, knowledge environment etc. which might become the deciding force to connect the future of both.

    Sure, China is still in a transitional period, we should allow it to take the time to sort-out things. But it is already the time to update China profile for both China itself and the Western world after the initial rising. China right now starts to face the bottleneck to update itself in the total supply chain. This updating process will take far more than the labour inputs but a whole new culture revolution

  3. The whole idea is so crazy, I am (at least so far) just attributing this as a smart PR move by FAW.

  4. Building large global enterprises is something history badly prepared China for. There were already established companies in every major industry in the world long before China started opening up her economy. One of the problems at the moment is the management of many large Chinese corporations still lack a cosmopolitan and modern approach to company management. To become globally competitive a radical shift of mindset is required for these managers. On the top of that is the bad business culture in China at the moment, most businesses are simply too opportunistic and short-term oriented (this really annoys me), yes, they may able to make some quick profit, but it surely wont build a solid foundation for long-term success. In my opinion, instead of taking the route of merger and acquisition any Chinese business corporations with the ambition of becoming a top class enterprise should focus relentlessly on good management practice and R&D, there is no short-cut! We can learn a lot from the successful stories of many Japanese and Korean companies, and a few successful Chinese companies like Haier and Huawei are also good models to emulate.

  5. “Bad Business Culture” might be an overstated term, but it Does give the right pinch. Chinese culture is known for her sophistication, but I would be shocked myself if I counted the percentage of Chinese people who are well programmed with its own culture. Period before the China’s Opening was actually trying to erase people’s memory of their civilisation and freeze their brains to continue their progress. However, the chauvinistic period did help China start all over from absolute nothing. Back to the point, historical problems remained; I wouldn

  6. there are some elements of truth in what you said. I think the bottom-up approach is good for innovation, which is something Chinese businesses badly need at the moment. The government always talks about ‘innovation’, but it just doesn’t happen. To achieve that China needs a much more open political culture in this connected age. I believe the internet censorship is already having some very negative impact on the IT industry. But the development of China is an extremely complicated and challenging engineering project for a government. the top-down decision making process may not be good for innovation, but it does ensure social stability in the short-term. Without stability you have nothing. At the moment we still lack a big enough middle class for any large scale political opening-ups.