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Daily Telegraph report

MG Rover's Chinese hopes are dashed By Damien McElroy in Beijing (Filed: 29/05/2002)

MG Rover's dream of securing its future in China looked in tatters yesterday as a Chinese provincial government signalled its determination to oust the chairman of its local partner, Brilliance China Automotive.

Chairman Yang Rong, the former central banker who founded Brilliance a decade ago, was yesterday struggling to prevent the government of the northern province of Liaoning from seizing a 48pc stake in Rover's new partner.

Brilliance shares came under heavy selling pressure in Hong Kong after reports that Chinese officials were determined to grab control of the car and minibus manufacturer in return for giving approval to ***, Rover's former parent, to set up a new plant in the provincial capital, Shenyang.

Mr Yang created Brilliance from nothing, using his reputation for unrivalled official connections to secure lucrative deals with the world's top car manufacturers. Rover, *** and General Motors all entered into agreements with Brilliance.

The company stood out from the ranks of Chinese car manufacturers only in its ability to make headlines. As a car company it belongs in the second rank, producing outdated models copied under licence.

The clash with the Liaoning government amounts to a devastating reversal of fortune for Mr Yang and could rob MG Rover of the deal-maker who had promised the company its first opportunity since the 1950s to be a leading player in the world's fastest car market.

Investment bank Morgan Stanley forecasts 12pc growth in Chinese car sales between now and 2005. The partnership would have seen Brilliance manufacture Rover models under its badge in Asia.

The have been some doubts about the venture since it was launched last year. Neither MG Rover nor Brilliance has been able to put a detailed timetable on the start of operations. Suo Yan, a spokesman for Brilliance China, said yesterday that as yet there was "no concrete cooperation" between the two companies.

Last year, Forbes magazine ranked Mr Yang as China's third richest man, worth £500m, largely as a result of the deals he has done with a long line of western companies and bankers.

In 1992 Brilliance became the first Chinese car manufacturer to list in New York. Its flotation was wildly popular but progress in the gritty world of Chinese vehicle production has been unspectacular.

Its most popular production is a Toyota-designed minibus, followed by a Chevrolet people carrier. But plans to gain government approval for the *** plant in Shenyang have been delayed for a year. The launch of its own car, called The Chinese, was given the go-ahead yesterday after a two-year delay.

MG Rover was unable to comment last night.

Financial Times Report

Brilliance gets green light for passenger car

Brilliance China Automotive (BCA), the mainland auto company, has received long-awaited approval to produce its passenger car, the "Zhonghua", or "China", clearing the way for production to begin this year.

The news, announced on a government website, is a welcome boost for the company, which has been under a cloud in recent months over its complex ownership structure and delays in approving planned ventures.

The car will be produced by Shenyang Jinbei, a joint venture 51 per cent owned by BCA, listed in Hong Kong and New York. BCA recently formed a strategic alliance with MG Rover, the UK carmaker, but is still awaiting final approval for a joint venture with ***, the German luxury car manufacturer.

The Chinese government must license all auto manufacturing ventures in what is considered in China a strategic industry.

The nervousness among investors over the delays in approving the joint ventures has been exacerbated by renewed questions over the company's shareholding structure.

BCA's Hong Kong-listed shares fell by nearly 7 per cent yesterday following a report in the Southern Weekend newspaper last week that the Liaoning provincial government was considering taking control of the company's assets.

BCA's greatest cash generator is its 51 per cent-owned Shenyang Jinbei Automotive, which has about 60 per cent of China's minibus market.

The newspaper said that BCA's management team would be changed as part of the review. BCA told the paper they had not been formally told of any changes.

BCA, incorporated in Bermuda, already has a peculiar structure as the result of its 1992 listing in New York, the first overseas listing by a mainland company.

In order to quell investor fears about its stability, Yang Rong, chairman and founder, injected shares into a non-profit body controlled by China's central bank, the Chinese Financial Education Development Foundation.

The foundation, with a 47.63 per cent stake in BCA, remains the controlling shareholder, despite complaints about its continuing use by Mr Yang in what is essentially a privately run company.

Central bank officials said recently they had been angered by Mr Yang's refusal to restructure the ownership to stop the use of the foundation as a vehicle to hold the shares.

BCA's ability to work its way through the thicket of issues will depend much on Mr Yang, an enigmatic but much admired figure in Chinese business circles.


Chairman of MG Rover's China partner may be ousted, putting planned joint venture into question
MG Rover's embryonic China joint venture with Brilliance China Automotive may be put in question in the wake of a problem with the Chinese government. The British Telegraph newspaper reports that Yang Rong, founder of Brilliance China, is at odds with the Liaoning provincial government and may be ousted as the government attempts to take a 48 percent stake in the company. The planned joint venture was to have Brilliance build rebadged Rovers to sell throughout Asia. Only yesterday, the Chinese government agreed to let Brilliance begin production on its own vehicle, named the Chinese. However, the newspaper reports, the provincial government will only let *** set up a production site in Shenyang if it can take co
ntrol of the Chinese partner. This would likely mean the removal of Yang, whom Forbes magazine recently named China's third richest person, and could possibly be the end of the deal with MG Rover. On the other hand, it could just as well mean a speedup of plans for the joint venture, with the Reuters news service noting that some investors in the plan have "grown increasingly impatient" at the length of time it has been in discussions without coming to fruition. A spokesman for Brilliance China said the company is unaware of any planned government takeover. The company will hold a news conference today to talk about the new sedan and will likely respond to the news reports then.

The above 3 articles originate via Paul Fucito - as you can see there are conflicting stories - lets just hope they are very wrong.

2,834 Posts

I saw this in the Telegraph and it had alarm bells ringing.

Especially as if it were true, one of the only bad bits of luck MGR have had seems, *** seem to have something to do with it again!!! :mad: :mad: :mad:


Discussion Starter #3
Autocar Update!

MGR's embryonic car mnufacturing plans with China Brilliance Automotive are taking off. The dozen MGR people already at work in China "will soon grow to hundreds", according to a spokesman.

They are preparing tp ptoduce new small and medium sized models, a well as existing MGR cars. An R & D centre will also be established. The firm has "totally rejected" media reports that the deal is in danger of collapse.
From Autocar - 4 June issue.
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