Keith Fitz-Gerald

Is China Detroit's Lifeline?

    Tweet This

Free Trading Guides

Enter the (Red) Dragon

Back in November, as GM and Chrysler tottered on the bring of complete collapse -- and after Japan's Toyota Motor Co. (TM) had reportedly considered, and ruled out, the purchase of one, or both, of these carmakers -- China's SAIC Motor Co. Ltd. and Dongfeng Automobile Co. Ltd. were reportedly working on a play to buy the two embattled U.S. firms, Huliq News and the 21st Century Business Herald both reported.

Said one China auto-industry executive (who requested anonymity): "We really want to acquire some of our global counterparts' core technologies now, because prices are so low."

His sentiment was echoed by Xu Liuping, chairman of Chongqing Changan Automobile Co. Ltd., Mainland China's fourth-largest automaker, who recently said that "the longer the [global financial] crisis lasts, the bigger the chance of [a] failure or [of] a scale-down of some American and European carmakers."

For the most part, Chinese companies are still learning to do business overseas. They are not yet comfortable leading the charge in overseas markets, which is why so much of their overseas expansion efforts and shopping sprees remain largely confined to natural resource sectors and, in the auto sector, auto-parts players.

Top-tier managers of China-based companies recognize that the acquisition of overseas assets can strengthen their company's domestic competitiveness. And with a market as big as Mainland China, that's logical. But what might not occur to Western business leaders, is that Chinese executives don't yet view themselves has having global-branding expertise, particularly when it comes to the so-called "design elements."

For instance, as my friend, Kishore K. Sakhrani, director of Hong Kong-based ICS Trust (Asia) Ltd., noted during a presentation to our investment group: "In the past, when a Westerner wanted a product in sea green, you often got something that was lime green. But many Chinese companies are now establishing Western design shops and closely consult [with] Western marketing experts, and the results will be obvious."

Indeed, in a sentiment that closely echoes my own philosophy, Sakhrani said that "there isn't an industry on the planet that the Chinese won't dominate -- or at least materially affect -- in the next 20 years."