And here we go again…
May 5, 2011 in News
It didn’t take long before the media found something bad rather than good to write about our new Chinese friends Hawtai… and I’m very surprised it was the “good” newspaper SvD who started the rumor-spreading with an article that is basically built upon speculation and zero facts.
Immediately after the press conference in Beijing on Tuesday, the Swedish Embassy in Beijing authored an internal report on Saab’s new major shareholder, Hawtai who have offered 1.3 billion SEK for a share of Saab. The report was sent to the Foreign Office yesterday morning and SvD Business has taken note of the letter.
There is a markedly skeptical Lars Fredén, ambassador to Beijing, who wrote a report on the matter. The embassy has apparently commissioned a review of Hawtai and now comes with a series of remarkable data back to Stockholm. The most sensational is that the Chinese car company has only manufactured their own cars for a year, according to the report.
In other words, not just a young car company that will save the Saab, but it seems to be a near newborn car dealership. Although Hawtai existed since 2000 but until last year was all production concentrated in the Korean Hyundai, which you then had a joint venture with. This cooperation is now scrapped.
So? This is perfect, two new companies helping each other out!
The very young car company says it has the capability to manufacture all 200,000 cars per year, but that last year only reached 81 000 vehicles produced.
So why is he doubting the capacity figures based on the amount of cars built? I thought the amount of cars built was a factor of the market’s demand, not the capacity of the factory? If so Volvo would build 450’000 cars each year regardless of how many they are selling.
It is a low figure in itself, which is called into question: “According to the embassy these official figures are also exaggerated,” writes Lars Fredén in the report. According to SvD’s sources in the Chinese automotive industry, is really about 60,000 cars produced last year.
Is he stating facts or is it his well founded belief, if so what is it based on?
If Hawtai’s low levels of production cars are true, there’s even more failed CEOs. “Hawtai have changed their CEO six times over the past eight years,” the report said. It indicates a turbulent time with a series of changes.
Well thats what happens in young companies, management is untested and if they do not perform well most companies does not have time or money to waste on people making mistakes.
It is the stormy wealthy chairman and owner, Zhang Xiugen, member of the Communist Party, which repeatedly throws out the old management and brings in new CEOs to Hawtai.
The embassy report reveals that Hawtai is part of a previously unknown conglomerate named Hengtong Group (which also sits Zhang Xiugen as chairman), including banking, telecommunications and mining. It is the latter which is the group’s real cash cow: “The embassy spokesperson says Hawtai’s financial muscle comes from mining operations more than it comes from automobiles.”
Some of the extremely profitable mines are located in the Ordos, Inner Mongolia, with a GDP per capita is the highest throughout mainland China. It is also interesting coincidence that one of Hawtais automobile factories located right in the Ordos region, writes Lars Fredén.
So where exactly would you build a factory Lars Fredén? In the poorest, worst place in the country?
In Sweden, Saab’s President Victor Muller’s latest magic trick is met with cautious optimism. In China, the reaction was different – largely negative, according to the embassy report. Many commentators believe that the Journal Hawtai with Saab deal to “buy” its reputation.
And these commenters are experts? Just like reporters in Sweden? 
Need I say more?
Skepticism is also clear to Ambassador Lars Fredén report. The deal was completed in less than three days. A series of question marks remain. Will the powerful National Development and Reform Commission (NDRC) to approve the deal. NDRC was not even present at the press conference, noting the embassy.
Lars Fredén also wonders what happens to the Saab’s technology and development in the long run: “Technology transfer is central to Hawtais interest for Saab. For Saab’s long-term competitiveness, it is reasonably important, however, that its integrity by-maintained, “said the ambassador.
Why does he care about the technology, did he invent it? Does he, have the patent? Saab owns it, its up to them to do what they think is right…
__________
Well there you have it… I think I’ve made my feelings pretty clear…
martinsaab said on May 5, 2011
You may see it in a positive way: at least this guy is NOT running/ruining a car company…:-)
nils said on May 5, 2011
Well, it is normal for the press to dig a bit.
A positive report from SvD is their test of the 9-5 against the new A6. The 9-5 has better handling and gives a better driving experience:
http://www.svd.se/naringsliv/motor/9-5-star-upp-mot-splitter-ny-a6_6138391.svd
Cokeisit said on May 5, 2011
It’s a good review but aren’t their conclusion way wrong? They give the 9-5 3 points and the A6 get 5 points! In all categories there is only one category that the A6 wins wit one point.
Their summary is really biased by their love for a dressed up Skoda.
zippy said on May 5, 2011
Dressed up Skoda! LOL!!
Edonis said on May 5, 2011
I agree, I find it strange that they only award the 9-5 three points when you look at the subscores. Maybe the author should have a crash course in maths…
Peter, Sweden said on May 5, 2011
This is just stupid — and t’s probably just a matter of time until it’s all over the place, presented as hard facts ._.
(Btw Tim, why are all of your articles filed as “uncategorized”?)
TimR said on May 5, 2011
Because I didn’t have time and I forgot =P sorry about that!
Peter, Sweden said on May 6, 2011
Ah well, you may be excused this time, sir
But really, in particular for new readers of SU, I imagine that the “related posts”-function is a nice way to find his/her way through here, so please use the categories so that your awesome work easily can be found.
Alexandros said on May 5, 2011
“Lars Fredén also wonders what happens to the Saab’s technology and development in the long run: “Technology transfer is central to Hawtais interest for Saab. For Saab’s long-term competitiveness, it is reasonably important, however, that its integrity by-maintained, “said the ambassador.”
If he is so worried about the technology transfer from sweden to Chine, than he should urge his government to make all efforts so that Saab will not need capital from China…
The Swedish Government told the ambassador to write a report. So he wrote down everything “negative” that he found. If he had written that everything is fine with Hawtai and Saab would fail in the next years, he could be somehow liable. So he took the safest way for him and reported rather pessimistic “facts”… now the conclusions have to be made in Stockholm…
saabonaut said on May 5, 2011
This statement of an ambassador is as weighty as an inner-mongolias grandmother’s rating about saab’s liquidity and honestly I’d rather trust grandma’s. Don’t know the exact saying in english – it’s like a fart in the forest. Whatever, let’s just ignore this unimportance and saab-on.
Johan said on May 5, 2011
Tim, you can hardly blame SvD for poor journalism in this case. All of the skeptical comments actually come from the Embassador of China – not just some journo with an opinion.
I wouldn´t call it alarming, what he says, but it´s definitely interesting and well worth an article. A good, however somewhat (for a Saabista) worrying, read.
I do agree with you on the part about the capacity – totally irrelevant comparison.
Cokeisit said on May 5, 2011
I find it strange that the embassy has performed an investigation in three days and that the press already has gotten its hands on it.
peeceepeh said on May 6, 2011
+1
sasak said on May 5, 2011
pure alibism. Our western society has become too defensive, too alibistic and too cowardish, media and politics are just reflecting this mood. The “see,-I-told-you-so” approach is a pure poison. We are taking off our pants way too ahead of the river. We have to stay defiant.
kochje said on May 5, 2011
Great view and super comment
Ebolie-21 said on May 5, 2011
I guess that Ambassadors and Embassies don’t work as speedy as journalists but it is normal that Governments ask their Embassy for comments however the question remains what weight is given to such information in the political decision procedure now and at the end of the day it is only the result that will finally be decisive for Saab.
kochje said on May 5, 2011
The Swedish ambassador is again doing what his government is doing; being negative about the attempts to rescue their own industries.
Even if it is all true what he figured out; is it not the most important that the money is invested, regardless if it comes from building cars or from mining or other activities hat holding performs?
VM can perhaps start thinking of bringing the Saab automobile to the Dutch stock market while we in Holland are not so pessimistic when it comes to business deals.
Carmania said on May 5, 2011
60.000 is higher than I thought. I read somewhere that it was only 30.000. BUT – their main business so far has been to produce engines and transmissions. The car business they will learn from SAAB and that’s good since SAAB will be in the drivers seat.
obelix said on May 5, 2011
I think it’s a shame the negative points are stressed (again) and the potential the partnership has is being neglected. However, imho there are some points in the report that need a more elaborate reply. For instance, it’s perhaps too easy to state that having had six ceo’s in eight years is due to being a new company. It does raise questions about the stability of this company and I for one would like to know more about its backgrounds.
Moreover, I think the remark about Saab maintaining its integrity is spot on.
In short, i don’t think the report is that negative, and it does raise some interesting questions. In response to this, we should play the ball, not the man.
Saab UP !
peeceepeh said on May 6, 2011
6 CEO in 8 y makes 1 1/3 y per CEO, right?
I think one has to keep in mind that China is a fast growing economy. Maybe it is quite normal for a CEO to not stay longer than one year. In such a situation, maybe people are trying to climb the ladder much faster than what we a used to in the western world.
At least Hawtai has been around for 11 years by now, has been involved in car production for respectable 8 years. For comparison: Tesla has started from scratch in 2003, and started its general production in 2008. So far, 1500 Roadsters have been delivered (soruce: http://en.wikipedia.org/wiki/Tesla_Motors).Does anybody have doubt about the credibility of Tesla?
I think SvD should have put the negative theories of that “report” into context. But they have chosen to use “big [!] doubts about Hawtai”. In that way, SvD is behaving as a member of the yellow press: What do I care about my silly babbling of yesterday’s.
BoeBoe said on May 5, 2011
@Kochje, Saab is listed on the Dutch stockmarket! Is you buy shares in “Spyker Cars NV” you are indirectly buying a part of Saab.
Saab is not listed in Sweden.
Ruben NL said on May 5, 2011
I thought it’s part of an Embassador’s job to strenghten industry and economy. The article quoted seems to show the opposite.
Tompa said on May 5, 2011
This i just as… I rest my case.
Cheers/Tom
saabluster said on May 5, 2011
Sorry Tompa but you lost me. What?
BoeBoe said on May 5, 2011
And what about the dealernetwork of Hawtai??? I guess when Hyundai left they took their dealers with them. So how large is Hawtai’s dealernetwork at the moment? And where are they located?
Carmania said on May 5, 2011
The Hyundai models where Hawtai-branded so I assume the dealer network is intact.
tom.nicholsom9 said on May 5, 2011
These rumors have been swirling for a while now, but this is legitimate do-or-die time for the fate.If he had written that everything is fine with Hawtai and Saab would fail in the next years, he could be somehow liable.
________________
Tom.
http://www.CheapCarInsurance.org.uk
Jeff said on May 5, 2011
I know I’m going to take heat for this comment, but I’m going to defend SvD for at least covering the letter from the Ambassador, as he holds a high ranking position in the government and his words should be heard. That said, I hope he gets royally flogged for not doing his homework properly, and that this piece helps him lose his credibility quickly. I’m glad that they covered it if only so it can be disproven and he has to issue an apology, not only to Saab but to the Chinese government.
Then if he feels like writing a resignation letter too, I’d be down for SvD covering that too, in fairness.
Johan said on May 5, 2011
+1
Audun said on May 5, 2011
+1 more.
peeceepeh said on May 6, 2011
You’re right, but isn’t it the job of a journalist to put new information into context? They didn’t do that, they were just too proud to present the information.
Audun said on May 5, 2011
Some positive news from TTELA:
http://ttela.se/ekonomi/saab/1.1203658-hawtai-ledning-besoker-saab
http://ttela.se/ekonomi/saab/1.1204218-eib-banar-vag-for-saab
http://ttela.se/ekonomi/saab/1.1203664-gm-ut-vladimir-antonov-in
http://ttela.se/ekonomi/saab/1.1204088-jobb-i-dag-men-ledigt-i-morgon
Audun
obelix said on May 5, 2011
tweet bij VA:
“Who cares how many cars our new friends produced?We don’t need a technology!We have it!We need a financial partners and new markets!!!”
michaelb said on May 5, 2011
VM and VA should rapidly team up to give the same message. In the common press conference in China VM pointed to the Diesel and transmission technology as resources for Saab. The statement by VA neglects or even dismisses this. Does not bode well for any kind of interaction with the Chinese strategic partner.
michaelb said on May 5, 2011
Don’t blame the journalist, it is an article about the Swedish ambassador’s report to the Swedish government. This report is interesting, as it might be considered with respect to the approval by the Swedish government of the transaction. Now apparently this report had to be written in a brief period of time, so don’t expect it to be very profound or with deep insights. Aside, the automotive know-how seems to be quite limited as well.
What I as an administrator would read from it:
- There is financial muscle behind it from highly profitable mining operations within a bigger conglomerate. Very positive.
- There is a very ambitious owner with talent to go into succesful longer-term cooperations, that do not last forever. The joint venture with Hyundai lastet from 2002 to 2010. Through these cooperations, Hawtai builds up an own engineering and production capacity. What is not clear, is their distribution capacity. In terms of product, their expertise seems to be SUV’s (from joint ventures with Hyundai), more expensive own sedans and Clean-Diesel technologies as well as gearboxes.
With some initial understanding I could add the following things:
- Interestingly, they have Diesel models built in license from VM Motori engines, including the new 6-cylinder RA 630, and with ZF, the same partners as Saab has (ZF) or had (VM Motori) planned. Thus, from an automobile engineering point of view, they are able to handle the high torque associated with Diesel engines and transmissions. There seems to be a fit for future needs. Positive, maybe even outside China.
- The company is very ambitious, but exposed: The emphasis on Diesels is not necessarily, what the Chinese government is pushing for right now: China up to now for passenger cars is mainly a gasoline market, because Diesel is expensive due to the immense truck (construction, transport) demand.
What is really planned by Chinese authorities, is to foster electric propulsion technologies, either full-scale or as hybrids. The motivation behind is not necessarily environmental protection, though the air in the cities might be improved considerably. The base idea is to reduce the growth of fuel imports, for balance of payments, terms of trade, government finances and for domestic inflation reasons. There enters Saab, which has proprietary know-how in both full electric and hybrid technologies. Very positive with respect for opportunities for Saab to create revenues.
From the report alone, as a government administrator I would not be negative, quite the opposite. Some initial googling around reveals quite some possibilities aside from financing, building NG 9-3 for the Chinese market, Clean-Diesel-gearbox opportunities as well as electric/hybrid solutions, which seem quite complimentary.
,
peeceepeh said on May 6, 2011
+1
This is what I would have expected a journalist of SvD to extract from the report. SvD didn’t do a thing in that direction. They didn’t take the time to analyze.
Andreas said on May 5, 2011
A brief comment only.
The embassy report comes so quickly after the deal, the quality of the report is questionable. Furthermore, it seems the ambassador engage in general opinion.
Andreas
9-5
TonymacUK said on May 6, 2011
I don`t know if this link will work but is Hawtai defence
http://www.google.co.uk/url?sa=t&source=web&cd=1&sqi=2&ved=0CCgQqQIwAA&url=http%3A%2F%2Fwww.google.com%2Fhostednews%2Fafp%2Farticle%2FALeqM5hZ2m8HxdRIyWIb53YvInATP-R7UQ%3FdocId%3DCNG.d3307569a9f63532b17cec86e01675f0.551&ei=-6jDTbznEMal8QOG-qDGAw&usg=AFQjCNEBxRJG0LBdNRMVYeW3VikWhT1Dlw