Beijing Automotive Industry Holdings (BAIC), one of China’s top automakers, has developed an interesting strategy in its bid to drive on to the global stage: it has become a sort of scavenger for older but still relevant intellectual property being discarded by other struggling automakers desperate for cash. BAIC announced its latest move on that front with a $43 million purchase of technology and equipment from Swedish transmission maker WEIGL Transmission. The fact that neither you nor I have ever heard of this company is beside the point. The deal follows a similar one by BAIC to purchase some older model designs from another Swedish firm, Saab. Are the two deals related? Again, this seems beside the point. BAIC seems to be showing a very targeted strategy of looking selectively for technology that can boost its products and profile in the run-up to an expected Hong Kong IPO later this year. Such a strategy would be far different from automakers like SAIC (Shanghai: 600104) and Geely, both of which have taken on far bigger challenges of buying entire foreign automakers. For SAIC the results were disastrous. The jury is still out on Geely’s Volvo purchase, but BAIC’s strategy could turn out to be a better alternative for these automakers as they rev up in the race to be the first into western markets.
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