Motor Vehicles and Parts News
- Nanjing Auto revives MG sports cars
Date: 19-Mar-2007 Sources: (Shenzhen Daily)
CHINA gets its first convertible sports car this month when a recently deceased British automotive genre rises as a Chinese reincarnation.
Nanjing Automobile is about to begin producing MGs.
The planned revival of the British sports car is the latest and most splashy example of how China's growing economic might is carefully reaching into foreign markets, buying troubled companies with established brands and using them to build bridgeheads for the billions of dollars that the country has to invest overseas.
'Within a very small period of time you will see a lot of industries following the same strategy,'said Wang Hongbiao, chairman of Nanjing Automobile in Britain.
It is a cautious approach, and a stark contrast to the paths taken by Japan and South Korea, which spent billions of dollars over decades to build recognized brands through exports before establishing a high-profile corporate presence overseas.
Still, China is in a hurry, and as it opens the floodgates for outward investment, many of its companies hope to leapfrog the start-up process by acquiring technology and distribution networks together with well-known names on which to build larger businesses.
It began in 2002 when TCL, a Shenzhen-based maker of televisions and mobile phones, bought the German company Schneider Electronics. Then Chinese computer maker Lenovo acquired IBM's personal computer business in 2004.
Qianjiang Group, the largest Chinese motorcycle manufacturer, now owns Benelli, the oldest motorcycle maker in Italy. Shenyang Machine Tool Group has bought Schiess, a longtime maker of German machine tools. Xinjiang Chalkis even owns a French tomato cannery and sells Chinese tomato sauce in Provence.
All of those acquired companies were facing financial problems. Many of China's foreign purchases have been focused on energy resources, dominated by big State-owned enterprises like PetroChina and CNOOC, which have spent billions in recent years acquiring oil and a natural gas fields. Those deals have helped swell the value of China's outbound acquisitions from US$18.6 million in 1990 to nearly US$14 billion on more than 100 deals last year.
China has made a cautious start to acquiring high-profile natural resources, while smaller acquisitions of foreign companies have been more important.
To encourage outbound investment, the Ministry of Commerce now accepts applications online and the State Administration of Foreign Exchange has abolished quotas on the purchase of foreign exchange for such deals. These changes have led to a sharp increase in overseas deals all over the world.
Nanjing Auto paid more than US$100 million for the MG assets two years ago.
MGs were the world's first affordable sports cars and became classics of their time. While the Italians built flashier sports cars for the rich, MG's British owners developed a loyal following among average-income automobile aficionados who still refer to MG's logo as the 'sacred octagon.'
'Emotion is the most important factor in purchasing cars,'said Wang, the Nanjing Auto executive. 'That's why we feel the brand is so important and is why we want to protect the British flavor of the brand.'
Rising labor costs and a series of missteps by British Leyland, which manufactured MG during its 1960s heydays, led to the sale of MG to several different owners before bankruptcy finally ended production in April 2005.
Nanjing Auto bought all of the MG plant's tangible assets, together with the rights to some of the most famous British automotive brands, including MG, Morris, Austin and Austin-Healey. It crated up most of the manufacturing equipment and shipped it to Nanjing, where it has been reassembled.
On March 27, Nanjing Auto's 60th anniversary, the Nanjing plant will start producing two MG models: the MG7, a five-seat, four-door sedan, and the MGTF, a two-seat, two-door convertible sports car. It hopes to eventually export the MG7 to Europe.
But the company has also signed a 33-year lease on a portion of the Longbridge factory site and this year is to begin producing the MGTF there for sale in Britain and eventually continental Europe.
Negotiations are even under way to produce a hardtop version of the MGTF roadster through a joint venture in Oklahoma, and Wang said that he hoped that Americans would soon be able to buy an MG.
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