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Chinese firms offer helping hand to SAAB

The European Automobile Manufacturers Association’s (ACEA) call for greater access to global markets may be happening faster than even the industry body had hoped, thanks to financial chaos at SAAB.  As two Chinese companies invest substantial amounts in the ailing Swedish company, greater access to the Chinese market may well become a reality for the company.

European demands

Meeting UK Prime Minister David Cameron at the start of June, the Manufacturers Association board members called for greater government support in Europe on the one hand, but less restrictive trade policies from non-European governments on the other.  Contradictory as it may seem, there is some method in the organisation’s madness.  The focus in the European automobile industry is the development of greener vehicles and the need for a robust electric infrastructure in countries throughout Europe is a key lobbying point that the board have focussed on with European leaders, including Cameron.

Exporting change

The ACEA argued that while their members are investing billions in green technologies their efforts need to be supported by national governments throughout Europe, if the technologies are to see any realistic take up.  At the same time, the fact that import tariffs and restrictive trade agreements with China, India and other major vehicle markets in the emerging economies make it difficult, if not impossible, for the European manufacturers to compete in these regions.  Indian manufacturers do not face similar barriers when exporting to Europe – according to theBBCIndia exports 250, 000 cars to Europe every year, while European manufacturers export around 5,000 in return.  Emerging economies are facing the same rising fuel costs as any other, and the ability to export cleaner technologies needs to be part of a global solution to a global problem.

Trading places

Almost immediately after the meeting, the landscape changed in Europe, when on 13 June SAAB announced investment from two Chinese manufacturers totalling 245m euros.  This is not just a simple ‘car loan’ but gives the two companies a 53.9% stake in the company.  The deal will allow SAAB greater access to the thriving Chinese market, if not quite in the way that the ACEA had envisioned.  While emerging economies, such as China, argue that their infant national industries need protection from global rivals, the ACEA argue that their counterparts in China and India are now established well enough to fight on global terms without trade protection in their home countries.  The Chinese investment in SAAB, seems to suggest they may well have a point.

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