SVD and Youngman, the full interview
February 20, 2012 in News
Below is a complete translation of the full interview that SVD did with Pang Qingnian which was published on SVD’s website in swedish here: http://www.svd.se/. It is an interview where Mr Pang opens up in a personal way he has not done before. A fairly impressive and eye-opening interview!
The chinese billionaire who is behind Youngman has already placed a revised bid on Saab – which he is prepared to raise. On top of that he wants to invest up to 12 billion SEK on new models. SVD Näringsliv has made an exclusive interview with Youngmans founder Pang Qingnian in China. However any exact figures regarding his own company remains a secret.
JINHUA, Saturday at 15:30. The 53 year old man comes walking towards us from his room on the top floor. The handshake is firm. We are in Youngmans 5 story HQ in the city of Jinhua in the chinese Zhejiang province. The room is about 100 sq meters big and decorated with chinese carpets. It also houses a conference and office part and a gigantic white leather sofa.
Once we’re seated it becomes silent, for a while. Pang will during the interview reveal good stuff. He has already turned in a revised bid which happened on valentines day, February 14th. He does not want to comment on the amount, but according to sources it is in the region of 2 billion SEK and is broken down so that each larger unit in the bankruptcy has gotten a price tag on it.
He is prepared to raise the bid – if the bankruptcy administrators shows the right “evidence” that it is worth more. He also states that he is willing to spend 12 billion SEK on development of new models. On a direct question he promises to keep both research and production in Sweden, it will still be there in 5 years.
But everything he states remains to be proven. Some people point out that he could have saved Saab a couple of months ago and avoided a reconstruction and bankruptcy. At the same time the bankruptcy is entering a hyper-nervous phase. Different bidders are flocking around, engineers are leaving and the bankruptcy is drained from its cash reserve. It is like a tub with the last of the water being drained away like a vortex.
The answer to everything will most likely be revealed within the next 10 days.
It is well documented that Youngman builds busses together with german Neoplan and in 2008 also started a car-production. Much more than that is an enigma to us. But Mr Pang Qingnian sits down with for nearly 4 hours – far into the saturday evening – and talks. He is kind of a chain-smoker, smoking the expensive brand of Ligun.
But first the farmers boy, who have built up an empire, delivers some news: He tried to buy Saab several years before Victor Muller showed up.
- We asked GM before the financial crisis of 2008 if we could start a joint venture in China with Saab. But GM already had two of them so they said no.
Why this particular interest in Saab?
- The brand, the new technology and car safety, he states.
When Saab was for sale in 2009, he again entered into the process – GM said no to all chinese companies. And in october of 2010, he again took contact with the Saab management. Since the the soap opera called Saab-Youngman has been rolling on.
Youngman were late with starting up car-manufacturing and are still very small in comparison. But started in 2008 with license manufacturing of a smaller car from Malaysia together with Lotus. Last year a brand new car was launched in the size of a VW Golf, the L5, developed together with Lotus in the United Kingdom. It is a cheep car compared to the competition and cost less than 10k Euro. A small SUV is to be launched later this year and bigger models will follow next year.
With a capacity to build 500’000 cars, only 30’000 were sold last year.
Judging by that YM have had to lower its estimates. The car sales in China, was tripled between 2005 and 2010, right now it has entered a much calmer phase where the domestic brands are the big loosers.
There are two trends within the sales-figures:
- Luxury cars from West are rising
- Cheep domestic cars are dropping
And thats where Saab will enter and fill the gap.
If you buy Saab – Can you promise that production and research will remain in Trollhättan after five years?
- Yes, it is vital. The rich chinese prefer cars that are built and developed in the west. We do not have capacity to develop cars here. And I would very much like to have as many from the old management left.
We are entering a soft spot – The former Saab employees who are now being employed by other companies in a swift phase.
- Yes that is a problem, time is short. Without the employees this will not work, everything must happen quickly now.
Another challenge is that Saab is practically unknown in China, but Pang Qingnian has a plan.
- We will focus on safety and the advanced technology and build up a sales network. Saab will become our main priority. Today we are placing about 20% of the money we spend on the automotive part is marketing and sales. That is our aim.
He is talking intensively, smiles often, makes gestures. It is easy to compare him with another chinese auto-entrepenaur: Geelys owner, the mild and soft Li Shufu, they are complete opposites.
Pang Qingnian lights up another cigarette and leans back. He starts talking about his own history again, his father who was a farmer, sick and poor. Him self that started working when he was less than 5 years old. He grew tea-branches with new technology and started to earn some money.
Within a short period of time he was able to build a tractor and started his own business. He entered the rubber business – produced tires. In 1983 he was ready to enter the vehicle industry. He started a government owned buss company in Beijing and imported technology from German Neoplan. He worked very hard, but was not allowed to buy the company and the management drove the company downwards. In 1997 the company was close to bankruptcy – thats when he was allowed to buy the company for 9 million Yuan, which is about 900’000 Euro.
Thats when everything worked out, after three years he was among the biggest producer of premium-busses. Today he dominates more than 80& of the market and builds about 5000 busses per year.
The daughter Rachel Pang, who is CEO of the car-manufacturing, enters and sits down beside her father. This week or perhaps next she will once again travel to Sweden. Mr Pang – which everyone calls him – Smiles towards her and continues to talk about Saab.
- We are ready to add another 12 billion yuan for product development of new models based on the new platform.
The Phoenix platform is only half-done. It could take up to two years before the first new models sees daylight, the 9-3… After that Youngman aims for a 9-4 and 9-5. After that its time for a 9-1, 9-6 and finally 9-7 according to Mr Pang.
Everyone who has followed Saab are well aware of such temptations.
Parts of the Saab management does not think that you have kept your promises, what are your views on that?
- There were many misunderstandings and there were a lot of parties. Perhaps we had different ways of seeing things.
But why did you not put in the money so that Saab could have avoided reconstruction and bankruptcy?
- There were many actors all the time with a lot of risk involved. We had taken great risks and put 47 million euro into Saab. Money that we are now at risk of losing completely. That is a clear answer.
Within the reconstruction, you were supposed to add another 70 million euro into Saab – But you didn’t keep that promise, why?
- That money was based on a right to buy licenses and use the upcoming Phoenix platform. To transfer such money we had to inform the NDRC that we had gotten access to the technology. We didn’t feel that we got enough of the technology in the negotiations with Saab. But we placed 30 million euro into saab anyway.
At 0200 AM during the night on December 19th 2011, youngman’s team was in a telephone meeting with Victor Muller, but neither then did Youngman give any money.
- GM once again said no to their licenses. There was very little time to make a decision and we could have ended up with an empty factory for another two years. We didn’t have time to investigate if we could build the current 9-3 model. It all became too risky.
Now the matter has been investigated – and the answer looks positive. He now thinks that they could produce the current 9-3 model in the factory in Trollhättan.
- It is not part of GM’s licenses and we are able to build it with a diesel engine and automatic gearbox – these are not controlled by GM. BAIC has some rights to a certain technology but we have investigated that it would take approximately three months to replace those body parts. After that it will take several months before any production could restart.
- We are first of all looking to fill the factory up to production capacity in Trollhättan, after that we will focus on production in China.
But the company will suffer heavy losses during the first years, the big question is: does he have money for that?
One thing not mentioned in a single word on Youngmans website is that he also owns a cole- and mineral-mine in the Ningxia provide in the north of China.
- I bought that company about four years ago. Back then it was called Ningxia Mining Group, now its named Guoma Tech Group.
He talkes about the cole-mine which last year gave a profit about 1 billion SEK and he is hoping for more within the next years. Regarding the rumors that the mining assets are worth about 30 billion SEK, he states: – More than that.
On this thing we will have to trust Mr Pang, the details are impossible to check. Mr Pang does not want to state how much turnaround nor profit Youngman makes.
- Every year lists are established about the richest people and companies in China. I am afraid to be seen on such a list.
The chinese government has recently deducted the credit balance for private companies. It could kill the possibilities to buy Saab. But he states that two weeks ago, he was in a meeting in the provide capital of Hangzhou. At the meeting were representatives of Chinas import/export bank, the Development bank as well as the government owned Bank of China but also the american bank Standard Chartered.
- They were all positive, he said and ads that Youngman would have the financing needed.
He states that he is keeping the NDRC updated on a regular basis and that the indications from them are positive. On the company website one can read that he is a party-representative for the Zhejiang province’s 12th party congress, in other words elected to decide about the 5 year plan that has already started.
We are now close to the burning question that lurks under the surface of China. Here sits a passionate entrepreneur, who at the same time is a member of the communist party, a dictatorship that puts people in prison for having a difference of opinion.
Pang Qingnian proudly states:
- If the party-secretary in Hangzhou calls and wants to gather the 10 most powerful men in the provide, he calls me.
What is your view on democracy and human rights?
- At Youngman we respect human rights, he states and smiles.
AlastairM said on February 20, 2012
“……the current 9-3 model in the factory in Trollhättan…..is not part of GM’s licenses and we are able to build it with a diesel engine and automatic gearbox”
I like and I don’t like the sound of that at the same time! On the one hand it demonstrates a ‘can do’ attitude and a willingness to think out of the box – an attitude that made Saab great before GM took over. On the other, well – the early Saab’s built under Youngman might be well….lets just say interesting…
I wish all the bidders well!
Carlo A said on February 20, 2012
I am very curios to find out where they think to source the diesel engine and the gearbox ….
the other Chinese company I do not remember the name) that signed the MOU before YM, had a plant building diesel engines under licence from VM of Italy …..
Timeshifter said on February 20, 2012
Diesel engines used in 9-3 were made by FIAT… With “little” bit of engineering, they may put in some real gas engine…
CSD_ChineseSaabDriver said on February 20, 2012
BAIC already got the engine ready a few months ago.
tianalfred said on February 21, 2012
that’s Hawtai’s OED engine company. Hawtai signed MOU with saab last May.
Aero1 said on February 20, 2012
Something is missing in Youngmans TRUE goals for SAAB!
baas900i said on February 20, 2012
please expand….
Aero1 said on February 20, 2012
I do not think Youngman is being honest, it hit me that there were no gurantees when they invested in SAAB before bankruptcy, so their explanation is in my opinion more smoke and mirrors.
Their main goal is getting technology and pretty much nothing else. SAAB needs a clear and morally stable company, that is fully in this for an indefinite period of time!!
Katsura said on February 21, 2012
If they just want the technology they would have just bid 2 billion SEK for the tech, that would give them an advantage.
Are they stupid, to bid for the whole thing when it’s only parts they want.
Katsura said on February 21, 2012
Talk about ‘trust worth’, you only need to look as far as VM’s promises. Of course, being European, he MUST be trust worthy.
jond said on February 20, 2012
My guess is that they were probably never going to deal before the bankruptcy. They would have had to take on all the debts, make the enormous investment required themselves and then share the upside with SWAN. It just wasn’t worth a candle. What they face now is competition for Saab, but China has such a huge reserve of foreign currency that they will probably be able to outbid any of it.
till72 said on February 20, 2012
From a pure business point of view it would have been weired to take over Saab with all the debts before bankrupcy. But otoh I think that YM were pretty much aware of those big players who would show up after a bankrupcy and make it much harder to get hold of Saab.
Katsura said on February 21, 2012
Indeed, it is “Taking on the debt” vs. “Possibility of not getting anything at all”. They made a calculated decision, like any business would do.
Carlo A said on February 20, 2012
It sounds promising ….. I just wish the end of the month comes quickly so we shall have our answers ….
Griffin Up !!!
saabyurk said on February 20, 2012
The plan with the diesel and automatic trans in the current 9-3 is just as I suspected, however, I would have thought there are a lot of other small GM components that might be an issue. But, what about keeping the U.S. dealer network alive? Would there be no U.S. Saabs available until the new 9-3 comes out? Or (and this would be great) have they figured a way to certify the TTID diesel for the USA?
TimR said on February 20, 2012
I actually think that there are a lot more components that he did not go into, the stereo system is just one thing… but I’ve heard a great number of stuff that are tightly linked to GM, they are however fairly easy to replace compared to full body components…
Carlo A said on February 20, 2012
yes Tim I agree with you ….. the entertainment system or the air conditioner may be pretty easy to replace …
the platform or the transmission require a big overhaul ….
Oskar Malmgren said on February 20, 2012
No matter what you think about Youngman, but it was uplifting to read this interview! I wish all the bidders good luck! May the best bidder win and a good future for Saab!
kochje said on February 20, 2012
+1
TimR said on February 20, 2012
Try using the thumbs up rather than +1 =D
Katsura said on February 21, 2012
But you can’t +1000 someone with thumb
Donald Munro said on February 21, 2012
Well said Oskar!
CSD_ChineseSaabDriver said on February 20, 2012
We are ready to add another 12 billion yuan for product development of new models based on the new platform.
==
That’s A LOT OF money, some 2 billion USD. God bless YM and SAAB I wish.
TimR said on February 20, 2012
I’m sorry but that is NOT a lot of money… its just about what Saab used over a 5 year period for normal product development. Remember that except for developing new cars, you have a continuous development for existing cars, they too need to be updated and developed to abide by new regulations etc. So 2 billion USD will just cover those costs. About twice that amount would be much more realistic if YM also wants to put in money to launch new models. For every car you have on the market, expect about 1 billion Yuan or SEK (about the same) per year per model for continuous development and upgrades.
Please read Saabs financial reports for the last 5-7 years and you’ll have a very good understanding of what it costs to run an auto brand…
CSD_ChineseSaabDriver said on February 20, 2012
Thanks Tim
Katsura said on February 21, 2012
How much of that ‘financial report’ is made to cover up GM mothership’s loses?
I often heard SU quoting that GM made up the book to make Saab appear lose making, so does that report also have part of that book shifting going on or not?
CSD_ChineseSaabDriver said on February 20, 2012
I am well curious about MM’s bid. Today is Monday of last week in Feb, if MM didn’t place a bid today, they are already gone IMHO.
Over BW nothing heard more about them.
terry9000k said on February 20, 2012
We still have Monday 27th…………….
CSD_ChineseSaabDriver said on February 20, 2012
True, but that would really be the LAST Monday Bid
orion said on February 20, 2012
Check this one: http://www.autointernationaal.nl/artikel.php?id=20665. The title of the article: Saab risen from death.
The chinese are definitely coming.
This car is called the Beiqi c60 (our 9-3)
Katsura said on February 21, 2012
The only thing that interests me from those direct copies, are the possibility of common components for repairing our own Saabs, should the company not be revived and original parts becomes impossible to source.
Katsura said on February 21, 2012
Oh and P.S> It’s sad to see the 9-3SS gets the ‘Chinese treatment’ like that.
Vagabond said on February 21, 2012
YM mentioned Saab production in China. I hope they do not utilize the same type of labour that the great Apple Computer used. They say it was slave labour.
Katsura said on February 21, 2012
On the reverse side, you have Chinese company such as Meizu, who treats their staff with respect and dignity as it should be:
http://www.engadget.com/2011/02/01/exclusive-a-day-trip-to-meizus-factory/
3cyl said on February 21, 2012
Would they be treated with repect and dignity if they participated in a peaceful public protest critical of the ruling party?
Katsura said on February 21, 2012
Of course not, they would be monitored and their life made a living hell. But we ARE talking about company/staff relationship here, not about social political issues. So why drag that in?
3cyl said on February 21, 2012
I suspect the company would participate in making their lives a living hell.
Vagabond said on February 21, 2012
How about unions. Can the employees unionize?
3cyl said on February 21, 2012
There is no need for unions in China. The ruling party knows what is best for workers.
Actually, you may find that there are organizations called labor unions or trade unions in China, but they are probably not what you have in mind..
Vagabond said on February 21, 2012
I’m a union member.