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Riding the wave of big bargain buy-ups

Updated: 2013-10-14 06:31
By Cecily Liu and Zhang Chunyan in London ( China Daily)
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Experts feel that Chinese companies have been able to manage integration relatively smoothly. As an example they cite the successful acquisition of British automaker MG Motor UK by SAIC Motor Corp.

Martin Uhlarik, design director of MG Motor UK, says the renewed production of cars after the SAIC acquisition is like a rebirth, as fresh capital infusion has allowed the company to flourish internationally. "MG is kind of enjoying a renaissance. It's not every day that a designer gets a chance to be part of that. Not many brands are being reborn with such a big investment."

In 2005, SAIC bought MG after the 89-year-old company went into liquidation. Three years later, MG began a small-scale assembly of limited edition MGs from Chinese-made kits at Longbridge, near Birmingham.

MG introduced its first car, the MG6 Magnette sedan, in the UK in April 2011, which was also the first all-new MG in 16 years. With the MG team's help, SAIC has also started producing MG cars in China, for the local market. SAIC employs about 400 people in the UK and sells several hundred cars a year in the country, but sales in China reached 200,000 last year because of surging demand for cars there.

Last month SAIC launched its first hatchback car model MG3 in the UK, sold across the country through its network of about 32 dealers, which is expected to increase to 40 by the end of this year.

Uhlarik says working as part of the SAIC team opened his eyes to the quick growth of China's automotive market - and made his job exciting and challenging at the same time.

"The Chinese market is changing so quickly, and the SAIC team's knowledge and expertise are growing so quickly. If you look at where SAIC was five years ago and look at them now, the learning curve of know-how has really exceeded my expectations."

SAIC's ability to support MG's remarkable growth is representative of the new trend of Chinese acquisitions in Europe.

Chinese manufacturer Shandong Yongtai Chemical Group Co acquired majority ownership of British car parts maker Covpress in July in a deal valued at 30 million pounds. Chinese carmaker Geely Automobile Holdings Ltd paid 11 million pounds for 80 percent of Manganese Bronze Holdings Plc, parent of the London Taxi Co, in February, after buying 20 percent of the company in 2006.

Seven months after the Manganese Bronze acquisition, Geely restarted full production of London black cabs at London Taxi Co's old factory in Coventry, in the English Midlands. Following the investment by Geely, London Taxi Co has created an additional 66 engineering and technical jobs in Coventry and expanded its London operations with the recruitment of new sales personnel.

Daniel Li, chairman of the London Taxi Co and chief financial officer of Geely Group, says: "We stick to our plan and we deliver what we promise."

Geely Group Chairman Li Shufu says: "We are pleased to have created dozens of new jobs, and have already begun work on the planning and design of the next generation of this iconic vehicle. Geely's priority will be to re-establish the manufacture, sale and servicing of new and current vehicles on broadly the same basis as existed before the business went into administration."

Since Geely acquired the company from the administrators in February, the company has cleared the inventory of vehicles that remained following the closure of the production facilities last year.

Once fully up and running, the production line will complete about 10 taxis a day, five days a week. They will be the most sophisticated produced by London Taxi Co.

In 2011 the company made 1,100 vehicles. Last year it turned out 900 before the administration forced production to cease. It plans to be back up to full production of about 2,000 vehicles a year in the next 12 months and expects to return to profit this year. About half of these will be for the overseas market after London Taxi Company won export contracts in Saudi Arabia and the United Arab Emirates.

"After a period of worry and uncertainty for the workforce, Geely Group's investment has secured the future of the iconic black cabs company, protecting highly skilled jobs in the Midlands and ensuring that London cabs continue to be made in the UK," British Business Secretary Vince Cable says.

Peter Johansen, vice-president of Geely's black cab operation, says Geely intends to further invest to expand production in Coventry in the near future and his team is looking for a suitable site to set up a new factory.

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