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“Let China sleep, for when she wakes, she will shake the world.”
--Napoleon Bonaparte
When Keith Fitz-Gerald, a great financial advisor and wizard on Asia, told me and his subscribers to his “Skeptical Advisor” newsletter that in a few years China would own General Motors (NYSE: GM), I just snickered.
You see, as Keith’s managing editor, I was used to his “outrageous predictions,” like the GM reference and how oil would hit $100 a barrel when it was trading at $30.
Who’s laughing now, huh, Keith? Well, I’m not…for one.
When I read Tuesday that General Motors said it had reached a tentative deal to sell Hummer to China-based Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd., my jaw dropped to the floor.
"I'm confident that Hummer will thrive globally under its new ownership," said Tony Clark, president of GM North America. "And for GM, this sale continues to accelerate the reinvention of GM into a leaner, more focused, and more cost-competitive auto maker."
Believe me, if Tengzhon were a public company, I’d be buying stock left and right, but it remains private for now. As far as GM goes, I completely disrespect the robotic dismantling of a company that used to claim, “As GM goes, so goes the nation.”
I didn’t touch its stock yesterday; I wouldn’t touch it today, and I certainly won’t after the government pours another umpteen billion dollars into it tomorrow.
So, now China has infiltrated GM as well. Who knows, maybe they’ll bid high enough to take over the Saturn, Pontiac and Chevrolet brands as well.
This reminds me of when China firms made unsolicited bids for Maytag Co. (now owned by Whirlpool, NYSE: WHR) just after China’s Lenovo Group (HKSE: 0992.HK) bought IBM’s (NYSE: IBM) personal computer unit for $1.75 billion.
Once the pride of long years of hard work and industry, corporate America has been infected by foreign companies and investment firms. Amoco, Westinghouse and Pillsbury, for instance, are all owned by companies outside of the U.S.
Though widely thought to be American, the following companies are just a few that are actually foreign-owned: Frigidaire and Rheem appliances, all Miller beer products, Trico auto parts, Gerber baby products, Dove, Nestlé and French’s food products, Kelvinator appliances, Genie garage door openers, Super Glue, Mack and Volvo trucks, Lysol cleaning products, Surf and Wisk laundry detergents, Hellman’s spreads and sauces, Alka Seltzer, Pennzoil, Glidden paint, Alpo pet food, Lipton, Browning Firearms, and Wilson Sporting Goods.
While the money coming from China is still limited -- $9.6 billion in 2007, up from $66 million the previous year, according to Thomson Financial -- it is reminiscent of the Japanese and German buying sprees of U.S. firms in the 1970s and '80s.
The biggest deals in recent months have involved Wall Street firms hit by losses from exposure to mortgage-related investment vehicles.
Citigroup (NYSE: C), Commerce Bancorp, Merrill Lynch (NYSE: SVC), Morgan Stanley (NYSE: MS) and Bear Stearns have all been tainted with foreign funds. But the investment hasn't stopped there. Smaller companies in remote parts of the United States are also being bought out.
As long as the U.S. dollar keeps getting weaker, China and any number of foreign countries will be willing to save the day for large, medium and small companies in crisis. It doesn’t always work out for the Chinese either. The $3 billion stake that China Investment Corp. bought in Blackstone (NYSE: BX) last May, for instance, is now worth closer to $2 billion.
I’d like to see the U.S. try to stand on its own two feet, but branding slogans like “Built Strong To Stay Tough” and “You’re in Good Hands” don’t seem to represent America very well anymore.
Bah, Humbug!
