GM, Chinese state owned SAIC Join Forces on Technology


By NORIHIKO SHIROUZU

BEIJING—General Motors Co. and its long-time Chinese partner SAIC Motor Corp. said Wednesday they signed an agreement to deepen their technical cooperation and further integrate SAIC into GM’s global product-development system.

The move is intended to allow the two companies to share technology and experience more widely to support the joint development of electric cars and components, GM and SAIC said in a joint press release. It is also aimed at creating a greater role for their joint research and technical center in Shanghai in the development of future vehicles and engines.

GM and SAIC signed the memorandum of understanding in order to “cement” their already close relationship, said a person close to the companies.

The companies have run manufacturing and sales joint ventures in China since the late 1990s and have recently been working on jointly developing cars.

“Today’s MOU reinforces our strong relationship with SAIC. New energy vehicles (such as electric cars and plug-in hybrids) are on everybody’s agenda in China. We want to ensure that we continue to play a leading role in the years to come,” said Tim Lee, president of GM’s international operations.

GM and SAIC said in their statement the agreement adds to a series of steps the two companies have taken in recent years to give the Chinese state-owned auto maker a bigger role in GM’s global strategy. For example, the companies signed an agreement in late 2009 to cooperate in their efforts to expand into emerging markets such as India.

The push to increase technical cooperation comes as SAIC is believed to be gearing up to buy a stake in GM by participating in GM’s initial public offering, which is expected to take place later this month.

Analysts said the agreement signed Wednesday would likely make it more difficult for those who might oppose foreign investors’ participation in GM’s IPO to block SAIC from investing in the U.S. firm. tHE person close to the companies said if allowed, SAIC would likely take a “very small stake” of less than 10% in GM.

Foreign participation in GM’s IPO is a thorny issue for the U.S. government. The Treasury Department is worried about the political reaction if non-U.S. investors, such as a sovereign-wealth fund or a Chinese company, were allowed to acquire a significant stake after U.S. taxpayers spent $50 billion to assist the company through bankruptcy reorganization.

GM and SAIC said in their press release the joint effort to develop more “new energy” vehicles and components is a “core element” of their strategic cooperation and could include the co-development of key components, a new electric vehicle platform or vehicle underpinnings for China.

The two companies also said they plan to share more gasoline-fueled vehicle architecture or underpinnings, engines and transmissions to help reduce development costs and produce economies of scale.

The person close to the companies said the technical-cooperation agreement is a “two way street” of benefits. The person said the move isn’t going to give SAIC unfettered access to GM’s intellectual property, but is “aimed to let us share more.”

Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: