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Volume I, Episode 33
September 25, 2007
UAW Tells GM No Jobs For China - Markets Hit 5,500 - Brief Look at China's Auto Industry - IPOs
Sinomania.TV

September 19, 2007

New IPOs Rock Shanghai! But is Resistance Building? A Big Push for Private Equity…

September 10, 2007

Report on APEC 2007 - Energy Security - Markets Update - IPOs in Hong Kong

August 30, 2007

Chinese Stocks Stay Up - Big Bond Sale - IPOs - Upcoming Party Congress

August 22, 2007

China Stock Markets Get Higher But For How Much Longer? - Surprise Rate Hike - IPO Update

August 14, 2007

China Toy Recall - Markets & IPOs - Western Banks Catch Asian Flu?

August 6, 2007

Shanghai Composite Busts Past 4,600 - Beijing Bets on Banks - Chinese IPOs in Japan

July 31, 2007

China Stocks Up Again & Again! - Pussyfooting Around Currency? - Democracy in Japan?!

July 25, 2007

Will Barclay's Turn Chinese? 2Q/H1 Macro Report + IPOs!

July 19, 2007

Food Fight! China-USA sling hash / Peak Oil? / Markets Flat Line...

July 10, 2007

Chinese markets confused? Big IPOs - Chery+Chrysler

June 27, 2007

COSCO - China Mobile - IPOs - Telecom Mergers & Acquisitions

June 21, 2007

New Record Highs in Hong Kong, Shanghai: Will Beijing Put On the Squeeze? - IPOs & more

June 15, 2007

Fundamental Misalignment: US-China currency war - stock markets up & IPOs

June 7, 2007

China Stock Pop - Hot News items - climate change, tainted food...

May 31, 2007

Chinese stock markets hiccup - IPOs - USA-China Trade Gap

May 25, 2007

Report on the 2nd USA/China Strategic Economic Dialogue: Win-Win or When-When? - Market numbers - New IPOs


May 18, 2007

New life for Hong Kong? IPO Update - USA/China summit


May 11, 2007

Will Shanghai end up like NASDAQ or Nikkei? - IPOs


April 30, 2007

Tulips to Dotcom - is Sino Mania the next big bubble?


April 20, 2007

The Heat is on! - IPO Report - Air Pollution in China


April 15, 2007

China markets, IPO update, Beijing Ready for Olympics?


March 30, 2007

China markets up, up, up! Sinomania! goes to China


March 23, 2007

Focus on National People's Congress... Hi-Tech, IPOs


March 17, 2007

China's new investment strategy, IPOs, the Wrap...


March 7, 2007

China syndrome or hong bao bounce? New IPOs... more!


February 27, 2007

China Stock Market Yo-Yo, new IPO issues, the wrap


February 17, 2007

Chinese New Year edition! Will China buy Chrysler & more!


February 9, 2007

The USA-China WTO trade dispute and New IPOs


February 1, 2007

IPOs: New Red Chip — Bubble Burst? — USA-China


January 26, 2007

BUBBLE TROUBLE? — IPOs on NASDAQ — Renminbi Yuan


January 20, 2007

IPOs in 3 hot sectors — BAOSteel — Macro Report


China MARKETS » China WEATHER »
HKEX Hang Seng Shanghai
SSE Shanghai Hong Kong
SZEX Shenzhen Beijing
MUSIC in China: Listen!
 

TRANSCRIPT: A Report on the the United Auto Worker nationwide walkout strike and whether GM plans to build its new electric cars overseas in China; A brief look at the Chinese auto sector; stock markets update; and a huge new IPO...
Sinomania! Volume I Webisode 33, September 25, 2007

Workers of the World - Guard Your Turf!
The UAW Takes On China.
A Huge New IPO, Markets, and More!

A NEW CEILING FOR SHANGHAI?

Chinese markets continue to rally. The Shanghai Composite Index reached new heights over the past week and has not dropped below 5,400. The numbers are much the same for the CSI 300 Index. B shares are somewhat flat but continue up overall. I still believe resistance is setting in and 5,500 appears to be a new magic number for the Shanghai Composite whether it goes much further remains to be seen.

Under new rules, China's Qualified Domestic Institutional Investor (QDII) program allows Chinese to invest in overseas stocks offered by domestic brokers in alliance with foreign asset managers. Mellon Asset Management, for example, this week launched its Southern Global Enhanced Balanced Fund and immediately sold over $2 billion US dollars in shares. This is a new and interesting opportunity in China's domestic market and heavy hitters such as T.Rowe Price, JP Morgan, Fortis, Deutsche Bank, and Societe General are possible players.

IPO REPORT

Another week, another record IPO! This week, China Shenhua, mentioned in last week's show, is not only the biggest IPO in China but the biggest IPO of the year for the world passing Russia's JSC VTB Bank that sold billions worth of shares in May. China Shenhua attracted over a third of a trillion US dollars in orders and could raise just under $9 billion US dollars.

UAW TAKES ON CHINA

For years the UAW - the United Auto Workers of America - appeared before the US Congress to bemoan the loss of jobs in the auto industry to overseas producers, primarily in China. For the past decade the UAW cooperated with big American automakers, took pay cuts, lost benefits, and joined car companies in demanding Federal action on a litany of complaints that it calls remedies for the collapse of the American auto industry.

The UAW and Detroit expects the US government to force Chinese currency appreciation, renegotiate or abandon China trade agreements, and provide outright protection to an industry that has over the past generation failed its customers, its employees, and its shareholders and investors.

But this week the UAW turned on its biggest employer General Motors and called the first nationwide walkout strike in a generation. 73,000 workers in 80 plants owned by GM are striking not over health plans or wages according to their union president but over job security, specifically whether GM will build its new electric car in the United States or in China.

One of the first great industrial conglomerates GM was the largest corporation in the world for much of the 20th Century but now owns less than a quarter of the market for new cars in the United States, still by far the most important auto market in the world. More than a decade ago, GM developed a plug-in electric car that it perversely abandoned. It now wants to reclaim that accomplishment and is pinning its hopes on the Chevrolet Volt. In fact, GM intends to make the Volt its global product for the future.

The Volt was shown at this Summer's Shanghai auto show just after being revealed in Detroit. The key to GM's new electric car is the E-Flex electrical system that can be used with different powertrains to make a gas or diesel hybrid or all electric car.

Not long ago, GM announced ambitious plans for 60,000 Volts in its first full year of production slated for 2010. For perspective, it took Toyota five years to get to that level of sales with the Prius. At those numbers, GM hopes to sell the Volt for $30,000.

How can GM get up and running with the Volt so quickly? According to GM Product Planning Director Benoit Schlumberger, the key to getting E-Flex volumes where they need to be for full production is the Chinese market. China, according to Schlumberger is where interest in the E-Flex system is developing fastest including use of the system with a hydrogen fuel cell and he said GM expects to sell a larger number in China.

GM this month announced its sales in China's domestic market reached one million units for the first time, a significant milestone. Last week the Managing Director of GM China, Kevin Wale, announced that GM was looking to build a new research and development center in Shanghai close to its huge joint venture operations and factories with Shanghai Automotive Industry Corporation. And just today, the US Department of Transportation announced tentative approval to Northwest Airlines for a direct Detroit-Shanghai route.

Indications appear that GM is looking to produce the Volt or its equivalent most likely in China. And the competition is heating up. The Miles Automotive Group, a startup from California, is already importing electric cars from China and hopes to introduce a full size sedan model - the XS500 - by late next year that will retail just over $30,000. And Malcolm Bricklin, the famous auto impresario, says he is still developing a plug-in electric car and working with several Chinese manufacturers.

So where does this leave GM and the UAW? Both want impossible concessions. How this standoff plays out will have serious implications for the US auto industry, for labor unions in America, and for US-China relations. Watch the outcome closely.

A BRIEF LOOK AT CHINA'S AUTO INDUSTRY

In 1979 Deng Xiaoping visited a GM assembly plant in Atlanta that made as many cars in one day as China made in a year. Then only the most powerful Chinese owned a private car but a decade later there were a million of them on the road in the China and that number swells each year.

In 1991 the Chinese government declared the auto sector a 'pillar industry' of the national economy. Development has been focused on autos and related infrastructure ever since. China is now the number two vehicle market in the world after the USA. Passenger car sales rose almost 40% last year.

China's first cars were made by companies in Nanjing and Shanghai in the 1950s but those platforms never took off. There are now 16 large automotive conglomerates in China but the big three are First Auto Works, Shanghai Automotive Industry Corporation, and DongFeng. All have extensive joint venture operations with American, European, Korean, and Japanese car companies. There are also wholly private companies that are making great strides such as Chery.

I'll see you next time!

© Sinomania! 2007 All Rights Reserved.

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