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NINETY EIGHT REGENCY

GM sold control of China unit for partner's sake, says GM China boss

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GM sold control of China unit for partner's sake, says GM China boss

Chrissie Thompson

Automotive News Europe -- January 14, 2010 06:01 CET

DETROIT -- General Motors Co. sold a 1 percent stake of its joint venture with China's SAIC Motor Corp. to the Chinese partner, giving SAIC a majority stake in the venture, to give the Chinese company more clout in its home country, said Kevin Wale, president of GM China Group.

For $85 million, SAIC raised its stake in Shanghai GM to 51 percent.

With majority ownership, SAIC can increase the “recognized size” of its company by booking the venture's revenues in the Chinese parent company's consolidated statements, Wale told the Automotive News World Congress.

“It enables them to do some things that are important to them in the domestic economy,” Wale said. “Having a significant revenue base makes them very large in terms of Fortune 500” rankings and increases their importance in China.

“They get more support, and that more support translates into better support for our joint ventures.”

GM had been discussing selling a controlling stake in the joint venture to SAIC for several years, Wale said. That agreement came around the same time as GM's decision to enter emerging markets, including India, with SAIC, but the two developments weren't directly linked, he said.

In December, GM created a new 50-50 joint venture in Hong Kong with SAIC to expand in India and Southeast Asia.

Despite now holding just 49 percent of Shanghai GM, executives of the U.S. automaker have said they don't feel SAIC is in control of the company.

“The business will continue to be run exactly the way it is run today,” Wale said. For instance, Tim Lee, president of GM's international operations, still chairs the Shanghai GM board.

Reuters contributed to this report

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100114/COPY/301149960/1131##ixzz0cbKOiVNq

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Something doesn't smell right here, and I'm not refering to the pu pu platter.

Despite now holding just 49 percent of Shanghai GM, executives of the U.S. automaker have said they don't feel SAIC is in control of the company.

“The business will continue to be run exactly the way it is run today,” Wale said. For instance, Tim Lee, president of GM's international operations, still chairs the Shanghai GM board.

That is, until the SAIC wants to do something that GM doesn't, and SAIC pulls the "We own 51%" card out of their back pocket to get their way.

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