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China looking to buy DCX/BMW engine plant, ship it back home
That China has its heart set on becoming one of the globe’s automotive powers is hardly news. Nor is it untrodden ground to suggest that the nation is exhibiting an exponentially frightening learning curve in the industry. The latest development, according the New York Times, is the pursuit of the wholesale purchase of a competitor’s factory in order to move it brick-by-brick back to the motherland.
China’s Lifan group, which is looking to sell in Europe in 2008 and America the year after, is working with the Communist Party to bid a Brazilian engine plant facility from DaimlerChrysler and BMW. The purchase (and subsequent 8,300 mile relocation) would jumpstart ’s powertrain fortunes, which to this point have been something of an Achilles heel.
(More details after the jump)
Far from a tired old dinosaur of a facility, the Campo Largo Brazilian plant was erected in the late 1990’s with a $500 million dollar price tag. It presently produces the 1.6-liter 16-valve Tritec mill (as seen in the MINI Cooper), but could likely be adapted to other sizes and configurations. The joint-venture agreement between DCX and BMW expires at the end of 2007, which appears to open the door for the Chinese government and Lifan to buy the factory.
Lifan is the only bidder on the plant, and would like to move the whole kit-and-caboodle in time to begin churning out new engines by 2008. That strikes as an ambitious target, but for a country whose laborers toil 16 hours a day, 7 days a week, it is likely within the realm of plausibility.
Should one of America's domestic automakers shutter a plant that's to China's liking, expect the nation to be among the first in line for bidding... and perhaps not to move it at all.
[Source: The New York Times]
Reader Comments (Page 1 of 2)
Paul 4:49PM (2/17/2006)
whats the matter american auto plants are not good enough for them
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Optimus Prime 5:04PM (2/17/2006)
Congress may have an issue with a Chinese (gov. supported) firm buying up an American factory and shipping the technology overseas.
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Charles S 5:19PM (2/17/2006)
There was a documentary about Wal-Mart, concerning how it had made and then broke the US-Owned Rubbermaid brand. Back then, Wal-Mart decided that Rubbermaid prices were too high, and wanted Rubbermaid to lower them, or that Wal-Mart would not stock its products. Rubbermaid couldn't do it, and so Wal-Mart ended up selling Rubbermaid-equivalent products, imported from China. In the end, Rubbermaid had to close many of its plants in the US, and sold them to several Chinese companies.
Guess what the Chinese companies did with the purchases? Yep, packed up all the equipments here in US, and sent it back to China.
I don't know if people really can sum up these purchases as all positive, or all negative, cause most of the time, things are a lot more complex. In the end, it's just the new paradigm in doing business in this day and age...
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Mick 5:29PM (2/17/2006)
As Lenin is alleged to have said:
"The Capitalists will sell us the rope with which we will hang them."
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Jason 6:04PM (2/17/2006)
Yeeeeaah, that's why the Russians are drowning in wealth currently.
Making a clever saying doesn't make it true.
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Lithous 6:22PM (2/17/2006)
Paul, the Communist better hang the Asian manager of the plant in the pic attached to this blog post. I mean, look at the guys in the background f-ing off, looking around and not being a great Party contributor.
"The Capitalists will sell us the rope with which we will hang them"
And to think the one thing that could stop the greedy corporations from doing this is the, well, all too often, greedy, consumer (I want that and I don't want to pay anything for it, except maybe loss of my job in a few years, but hey, that few years is forever away). Refuse to buy Chinese products and in the end their form of Communism will meet the fate of the Soviet's. Easy solution to such a complex problem with such mind blowing reprocussions.
I think it was God who said, "The consumer shall not think beyond the moment for any purchase made in a Capitalistic society, not ever". Well, one would think that God said something like that since it is followed like the gospel by all the lemmings.
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American 6:29PM (2/17/2006)
Lithous - Since you are such knowledgable person, and you're the "Buy American" cheerleader, why don't you run for Congress? You're smart enough right? You know all the issues involved, right? So then do something about it.
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Lithous 6:36PM (2/17/2006)
Jason, you are joking right?
I mean, you don't understand the difference between the Soviets and the Chinese? The Soviets exported nothing (except maybe some arms but that's harldy enough to feed and prosper millions and millions). The Chinese are going to have a super economy (money) and super manufacturing (for everything including superior weapons). Gee, sounds like America in the 1950's, not much good happened to that country (until we started selling the rope as described).
Except that the Chinese ARE controlled by their gov't and so all the sell outs that "sold the rope" to the "enemy" as our Capitalists are doing now, will simply be stopped (killed) from selling the rope back to any other country by the Chinese gov't once they have the rope.
Thier way of life is only superior if we all sit back and let it happen that way. A well educated society sees the problem up front and doesn't NEED their gov't to step in and stop the rope from being sold. Because the people should stop it themselves.
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Charles S 6:43PM (2/17/2006)
Errr... Russia currently have many social problems relating to current economic structure, which they may not have if they were still communist. I'm not saying that Communist is better, but just because Russia (and other former USSR states) have adopted capitalism, doesn't mean that everything's all grand and dandy.
China is much more capitalistic compare to a decade ago. The middle class has swelled, but economic boom doesn't mean that everyone can benefit from it.
Lenin's quote is simply one point of view, and it CAN be true in some perspective, but we as Americans have grown up to dislike anything that can be considered "anti-American".
Personally, I don't believe there is ever such a thing as a perfect capitalism, socialism, or communism.
United States does NOT have a pure capitalistic socieity. If consumers can determine what is good and bad for ourselves, then why ban over the counter sale of Arsenic? Why put a quota against the importation of foreign cars?
The sale of factories like this is not about communism or capitalism, but simply the current economic climate of globalization.
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Charles S 6:55PM (2/17/2006)
"The Soviets exported nothing"
Hmmm... obviously people here are not aware that Russian's robust economy is powered by their sale of oil, and if you haven't guessed it, they are doing VERY well of late.
Oh, just in case that the readers here do not keep up with foreign news; while US used to criticize the Russians all the time about human rights issues, now our gov't have turn 180 and can't keep our lips off of Putin's behind.
Americans can say all they want about the evil Chinese/Russian gov't or how communism is the root of all evils, but we embrace globalization because we enjoy our current lifestyle, which is supported by cheap Chinese goods and the anti-OPEC factor in Russian Oil.
Don't forget, Chinese gov't own a LARGE share of US treasury bonds. China has the power to downgrade our economy by simply telling people that they are THINKING of selling their holding...
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Jason 7:01PM (2/17/2006)
Lithous, unless Lenin was Chinese, I wasn't talking about the Chinese. So, no, I was not joking.
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Charles S 7:37PM (2/17/2006)
"Refuse to buy Chinese products... Easy solution to such a complex problem with such mind blowing reprocussions."
Well, not that I am against the idea, but good luck in the effort...
First of all, just TRY not to be one. Walking around your home and pick up something and see where the product was made.
Second, people are NOT EVIL by choosing to buy cheaper goods (that's the core ideal of capitalism afterall), but rather that companies cannot stay in business if we believe in the capitalistism. If the Chinese make a better and cheaper widget, should we put tariffs on the imports, and allow poor, expensive domestic product continue to pump out junk? Hey, do we believe in "competition benefits consumers" or not?
Third, if people are not aware, US is NOT the only country that imports from China. We may be one of the biggest, but one day, it is quite possible that China will be stable enough that it won't need us anymore. Worse, knock on wood, we have such high deficits that the rest of the world STOP investing into our economy, and start investing into China's instead!
The idea of boycotting Chinese goods sounds nice, but unless we, as a society, are willing to drastically change our lifestyle, it will do us NO good. We choose to buy petroleum fuel over alternatives because it is economically beneficial for us to reduce our costs and use cheaper fuel. We buy Chinese goods because we cannot make products cheaper than they can. If we stop importing all goods, our lives will be completely different today (too much to go into here).
Personally, if I have to pick between importation of cheap goods, versus importation of oil, it would be much, much, MUCH easier for us to adopt to new fuel infrastructure than to have to boycott millions of products all at once.
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rw 8:49PM (2/17/2006)
I can see it now what an ad "purchase the vehicle that was chairman mao's dream car".
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steve 9:07PM (2/17/2006)
It's globalization. The companies will be globalized then there will be no boundaries between nation already. The same thing in US. The companies sell products to White, Black, Indian, Mexican, Asian. Now as the companies globalized, they will sell to all others countries.
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Lithous 9:25PM (2/17/2006)
"Hmmm... obviously people here are not aware that Russian's robust economy is powered by their sale of oil, and if you haven't guessed it, they are doing VERY well of late. "
I specifically stated "Soviets", because the point I am trying to make has to do with Cummunism. The difference between SOVIET UNION (not Russia) Communism with Chinese Communism. You are saying things like "economy is" (present tense) and "of late" (again, present). Two different things. NOW Russia is exporting more. I saw a shirt in Sears that stated, "Made in Russia". EXACTLY MY POINT. RUSSIA is doing better now because it does export much more than when it was part of (the main piece of) the Soviet Union.
"Lithous, unless Lenin was Chinese, I wasn't talking about the Chinese. So, no, I was not joking."
Jason, the quote from Mick stated simply "us" (as in "sell us") not "sell Russia the rope". Lenin could have quite well meant "us the Communist". So your assumption of him meaning specifically (Communist) Russia and not (to include any fellow Communist like) China is similar to me seeing you belittle what he stated as if he (Lenin) was way off and me thinking that you thought that China could never succeed in the long run with Communism because the Soviets didn't.
I mean, this blog post is on the Chinese (not Soviet Russia). Mick added a comment about what a major Communist player allegedly stated. Mick was simply attempting to show how Lenin appeared to be more correct than people may have thought, no, not about the Soviet Union, but about Communism. So seeing your statement afterwards just made me want to clarify if you thought that China was the same as the Soviets in their Communist staying power.
Anyway, maybe you did mean something else but people could read what you stated and get confussed that all because the Soviets failed with their form of Communism doesn't mean China is going away soon. I just want to stress the point that comparing the two is like comparing apples to oranges (in long term staying power).
"Second, people are NOT EVIL by choosing to buy cheaper goods (that's the core ideal of capitalism afterall),"
I thought the core ideal of capitalism is open markets to let the market decide what the price should be whether high or low based on supply and demand. This is where the Chinese fail. I mean, if they don't have open markets with free trade (i.e. by law a foreign car company building/selling in China MUST be paired with a domestic company and on and on) then that breaks their end of the contract and so do you have to keep your end? I like mirror image policies myself. The japanese gov't helped Japanese car companies for years WHEN THEY NEEDED IT. I have no problem helping GM or Ford out WHEN THEY NEED it. There is no pure Capitalism (as you stated) so don't fool yourself (saying that to others) and think it is like the TV show Lost where if you don't reset the timer something is going to happen catastrophic (i.e. if you protest by not purchasing Chinese goods the Capitalistic chain won't break).
"it is quite possible that China will be stable enough that it won't need us anymore. Worse, knock on wood, we have such high deficits that the rest of the world STOP investing into our economy, and start investing into China's instead!"
Yes, all of the above will most likey happen. Do we just let it happen (because we are good little lemmings)?
"We buy Chinese goods because we cannot make products cheaper than they can. If we stop importing all goods, our lives will be completely different today (too much to go into here)."
Yeah, but so many times, people have to see that cheaper is not better. Crappy toys that break so your child will swallow a piece of it or just have to be thrown away or any widget that doesn't last longer that we use, is it worth the cheaper cost? Germans wouldn't sell a car if that was the case (that Americans only buy for cheap cost). As for the last sentence of the quoted statement, yes, of course. The life changes would be much better for the long term though, IMO.
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JGN 10:13PM (2/17/2006)
China is unduly benefitting through reverse engineering and the stealing of ideas that other nations companies paid to develop.
Because of that, they are getting a substantial head start.
I'm not sure that I agree with them being able to get away with that, especially since they have an unfair advantage when it comes to the cost of labor and environmental standards that they do not adhere to.
I would support tariffs on Chinese products based upon the tactics they are using. The technology they have stolen should be paid for.
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Jason 11:02PM (2/17/2006)
Ummmmm...every company reverse engineers, including good old GM.
http://tinyurl.com/btzar
You going to ask for tariffs on GM now? They steal! *gasp*
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Jason 11:12PM (2/17/2006)
Yes, the Soviet Union and China is apples and oranges. And yes, I did specifically mean Lenin as applied to the USSR, regardless of the topic of this news item.
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JGN 11:37PM (2/17/2006)
18.
There is a difference. Even if GM reverse engineers, it seems to be learning nothing from it. No tariffs needed really.
I suppose I should have expanded by saying that China seems to be among the most flagrant of copyright violators.
Still, coming in late in the game has its advantages when a lot of the research that was paid for by other companies can be gleaned through examining what has already been done.
In that regard, it would almost be economically viable to fall behind for a while, while others invest in the technology that you can later steal.
It offers little incentive to be on the forefront of development though, if all of that investment is just going to be stolen in one way or another.
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JGN 11:52PM (2/17/2006)
Still, at this point, there is enough technology out there that GM can make use of to at least stay competitive. GM are getting too far behind what other companies are offering at this point to remain viable. Despite the lowered price, their products are still not cost effective in the long run.
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