Tag Archives: General Electric

China Alternate Energy Invests Overseas 中国替代能源企业海外投资一石两鸟

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Having diffused a potential trade war with the US over unfair subsidies, China’s alternate energy firms are moving quickly to show they can be important investors in the markets where they do business rather than simply selling their products there, as evidenced by 2 newly announced deals in the wind and solar sector. Interestingly, both deals are in Canada rather than the US, with the first seeing solar panel maker Canadian Solar (Nasdaq: CSIQ) announcing a relatively major new solar power plant joint venture with local partner SkyPower. (company announcement) The second deal is seeing alternate power plant operator Longyuan Power (HKEx: 916) building a major new wind farm, with General Electric (NYSE: GE) announcing it will sell about 50 turbines to the project. (company announcement) Both announcements are relatively straightforward, with each seeing the Chinese company put up investment dollars to build and operate locally-based power generation projects that will help develop the alternate power market. In Canadian Solar’s case, the company is essentially buying a big stake in a number of solar power projects already begun by SkyPower, essentially giving SkyPower some cash to develop additional projects. In Longyuan’s case, this alternate energy arm of one of China’s top power producers is not only putting up  money to develop this major new wind farm, but is also showing its commitment to buying equipment for not only from Chinese but also other foreign equipment producers like GE. These latest 2 announcements come just a week after another major solar panel producer, Suntech (NYSE: STP), announced another US solar project at Edwards Air Force Base in California, underscoring it would supply the project with panels manufactured at its US-based factory in the state of Arizona. (previous post) The Chinese firms have embarked on their public relations campaign, most likely with encouragement from Beijing, following the latest developments in an ongoing dispute with the US and Europe over what the western nations believe are unfair subsidies from Beijing. That dispute saw the US open an investigation last summer that could have resulted in large punitive tariffs. But in the most recent development, tariffs recommended by the Obama administration were small and appear to be largely symbolic, indicating Washington wants to avoid a trade war in the important alternate energy space. (previous post) So now it’s China turn to show some good will, and this recent string of announcements appears to be part of that campaign. What’s interesting is that these latest moves by Canadian Solar and Longyuan could actually be not only good for PR, but could also be smart longer term investments if they can eventually be sold to professional alternate power plant operators. Billionaire investor Warren Buffett made it clear last year that he sees potential in the area, investing $2 billion last year for a solar plant in California. (previous post)

Bottom line: A new Chinese wave of investment in western alternate energy projects is largely a PR exercise to diffuse a recent trade dispute, but could also be a good longer-term investment.

Related postings 相关文章:

◙ Suntech, Canadian Solar in Latest PR Moves 尚德电力和Canadian Solar就西方倾销顾虑作出回应

◙ LDK Cuts, Suntech Waits As Solar Winter Nears End 太阳能行业冬季将结束：赛维裁员，尚德等待

◙ Buffett Brightens Solar Prospects 巴菲特进军太阳能 行业美好前景可期

China: A Fickle Global Shopper 中国企业缺乏并购经验

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Three recent global M&A deals by Chinese firms outside the resource sector are highlighting the country’s potential as a major new player for such deals, but also its unreliability, as only 2 of the 3 deals ultimately collapsed. This ratio of 2 failed deals for every successful one could well indicate what we will see from China over the next 2-3 years, as many deals collapse for a wide number of reasons, from lack of financing to disapproval by Beijing, or even changes of heart by fickle acquirers. In the most high-profile of the 3 recent deals, a months-long effort by 2 obscure firms to buy a controlling stake in Saab has finally collapsed, with the dying Swedish automaker officially filing for bankruptcy. (English article) The deal, which would have seen Pangda Automobile (Shanghai: 601258) and Youngman Lotus take their stake in exchange for a big cash infusion, looked desperate from the start, and I predicted it was doomed to collapse due to lack of experience by the 2 companies and disapproval from Beijing. (previous post) The other 2 deals involve HNA Group, the investment arm of the Hainan provincial government, which is shaping up as a relatively savvy player as it embarks on a global M&A drive using its cash pot of more than $6 billion. (previous post) In one of those deals, the company just completed its $1 billion purchase of GESeaCo, the container leasing arm of General Electric (NYSE: GE). (English article) HNA made the bid together with a non-Chinese firm, Bravia Capital, which may have played a key role in the successful completion. HNA’s other recent deal wasn’t so successful, with the company citing financial market turbulence behind its decision to suddenly abandon a previous pledge to buy 20 percent of Spanish hotelier NH Hoteles (Spain: NHH). (English article) My only observation in this case is that HNA should have considered that factor much earlier in the process rather than waiting until the last minute, a decision that caused NH Hoteles shares to plummet 30 percent since the decision. All this goes to show that Chinese firms may have plenty of cash and want to do more major global M&A, but that they will be highly unreliable buyers for the next few years due to inexperience — a factor that many foreign sellers need to consider before starting any negotiations.

Bottom line: A recent string of 3 major global M&A deals by Chinese firms, 2 of which failed, show these firms want to become major players but will stumble frequently due to inexperience.

Related postings 相关文章:

◙ More Stumbles for Saab Rescue, 360Buy IPO 搭救萨博和京东商城IPO两计划注定命运多舛

◙ HNA: China’s Next Big Global Investor? 海航集团：中国下一个大型全球投资者？

◙ Message to Saab: Don’t Count on China 萨博不应指望中国注资

HNA: China’s Next Big Global Investor? 海航集团：中国下一个大型全球投资者？

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China’s HNA Group is taking an unusually high-profile approach to global M&A, seeking out assets at bargain prices as it attempts to become one of China’s  first major private investors on the worldwide stage. HNA, controlled by tropical Hainan province, is perhaps best known for its ownership of Hainan Airlines (Shanghai: 600221), a flagship asset long considered one of China’s best run airlines and whose investors also include billionaire George Soros. Now the company is talking about a recent global buying spree that has seen it snap up assets in a range of industries, including shipping and hotels, and boasting it has an additional war chest of more than $6 billion for more purchases. (English article) This company already caught my attention last year when its name popped up as a serious bidder for struggling US film studio Metro-Goldwyn-Mayer, better known as MGM. In August it teamed up with a private equity firm to buy GE’s (NYSE: GE) SeaCo container leasing unit for $1 billion, and its top executive said it’s sniffing around for other major deals as well. Despite its government ties, this company is quite interesting as it behaves much more like a private firm than other big Chinese global investors, whose moves are often motivated as much by politics as by commercial factors. As such, HNA looks strikingly similar to CITIC, the sprawling, quasi-private Chinese investment group that became a pioneer in the 1980s and ’90s by buying up assets outside China, many of those in Hong Kong, as the country began opening to the West. It’s still far from clear that HNA can become a serious new Chinese investor on the global stage, as the major transactions it is trying to pursue are often expensive, complex and could potentially run into political issues. But HNA certainly seems determined to become a player, and its strong connections and limited successes so far could mark the beginning of its longer-term emergence as a big new player on the global investment scene.

Bottom line: HNA Group could become China’s next big major global investor if it can extend its short but relatively successful strategy for global M&A.

Related postings 相关文章:

◙ Watch Out China Energy Majors, Here Comes India 能源公司注意：印度来了

◙ CNOOC’s Latest M&A: A Shaky Oil Sand Castle 中海油收购加国油砂生产商或招来更多麻烦

◙ Shenhua Takes Smart Step Into Mongolia 中国神华走入蒙古

Two Generals Team Up in Latest EV Drive

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There’s been a flurry of news on the electric vehicle (EV) front these last 2 days, as China enlists US heavyweights General Motors (NYSE: GM) and General Electric (NYSE: GE) to try and jumpstart the country’s sputtering drive to environmentally friendly cars. But despite the hype, the two latest initiatives look largely symbolic to me, and it’s hard to tell if either will have much impact. One deal will see GM and Chinese partner SAIC (Shanghai: 600104) step up their EV development, with GM making vague promises to transfer more of its cutting-edge EV technology to China as it prepares to import its state-of-the-art Chevy Volt on a trial basis. (English article) The second deal will see the two Generals, GM and GE, install charging stations in Shanghai on a very limited basis at GM’s China headquarters and in the pilot district of Jiading. (English article) The pair of announcements follow a similar, more interesting one last month, in which GE teamed up with US rental car giant Hertz and Chinese EV maker BYD (HKEx: 1211) in a drive to make EVs available on a rental basis with GE supplying necessary charging infrastructure and BYD supplying cars. (previous post) I applaud China for its steadfast determination push ahead with its EV drive, which it is trying to do by offering buying incentives and by coaxing big names like GE, GM and Hertz to provide the necessary infrastructure. But it’s clear from the reserved nature of all these announcements that the biggest piece of the equation — consumer demand — is still missing. The rental car concept being rolled out by Hertz is good, as it will allow consumers to test out EVs and feel more comfortable with them before making a purchase. Beijing needs to make more moves like this, including a broader public education program, to build up the necessary consumer confidence that even the most aggressive infrastructure-building program can’t provide. Without such confidence, China’s EV drive could sputter and die before it even gets started.

Bottom line: China’s latest EV initiatives involving GE and GM look largely symbolic, and instead Beijing should focus on building the necessary consumer confidence to make its EV program work.

Related postings 相关文章:

◙ Hertz, GE Give Jolt to BYD Electric Cars 赫兹新项目为比亚迪“加油

◙ Beijing Sends Mixed EV Signals 中国应推进电动车基础设施建设和宣传

◙ BYD Toots Electric Horn in Shenzhen 比亚迪在深圳奏响电动汽车号角

Hertz, GE Give Jolt to BYD Electric Cars 赫兹新项目为比亚迪“加油

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After months of announcing electric car deals that have largely left me unimpressed, BYD (HKEx: 1211) has finally come up with a tie-up that looks like a move in the right direction in its uphill quest to boost its costly alternate energy vehicle program. Ironically, or perhaps appropriately, BYD, the struggling auto maker backed by Warren Buffett, was surprisingly quiet during this latest announcement, leaving most of the talking to Hertz, the US auto rental giant which is teaming up with General Electric (NYSE: GE) in this latest initiative. (English article) The initiative will see Hertz offer BYD’s E6 electric vehicles for rent in Beijing, Shanghai and BYD’s hometown of Shenzhen, with GE helping to build up an initial network of 770 charging stations. This is exactly the kind of public-private partnership that we need to see more of from BYD, whose electric vehicle tie-ups to date have mostly been with local governments and have put few if any of its cars in the hands of consumers whose mass buying power will be critical to the success of any electric car initiative. Hertz and GE bring two strong private-sector partners into this equation, no doubt with strong support from city governments, ensuring that decisions will be made on a commercial basis rather than a political one. This program also offers the advantage of scalability if it proves popular, with the national potential that only a private sector organizer could bring. If it works, I wouldn’t be surprised to see Hertz and GE eventually bring EVs by other car makers like SAIC (Shanghai: 600104) into the program eventually, and expand the program throughout China

Bottom line: BYD’s new partnership with Hertz and GE marks its smartest tie-up to date to promote its struggling electric car business, and could provide a template for future development.

数月来比亚迪(1211.HK)宣布的电动车协议大多平淡无奇，但日前一次联合看起来终于像是走到了正确的方向上，朝着推动比亚迪替代能源汽车目标努力。不过很有意思但也很恰当的是，比亚迪对于此次合作意外地安静，大多数发言都出自美国租车公司赫兹国际(HTZ.N)。 赫兹联合通用电气（GE）(GE.N)在华推广电动车，且将优先采购中国国产电动汽车，最先选定车型是比亚迪E6，初期先在上海、北京和深圳三地试点推广。GE将帮助建成第一批共770个充电站。这正是比亚迪需要推出更多的“公私联姻”模式。迄今为止比亚迪的联合对象多属地方政府，并未把多少电动汽车推到消费者手中。此次合作中，当地政府的支持当然毋庸置疑，而赫兹与GE的参与，相当于两个强大的私营部门角色加入其中，从而保证相关决定基于经济基础而非政治基础。该项目如被证明很受欢迎，具备在全国推广的潜力，将带来规模效应，而向全国推广，操作上只有私营力量才能运作。我认为，如果方案可行，赫兹与GE可能会逐步将其他厂商，如上汽集团(600104.SS)的电动车引入项目中，并面向全国推广该项目。

一句话：比亚迪与赫兹、GE的新项目是比亚迪迄今最明智的“联姻”，有助于其苦苦挣扎的电动汽车业务，并为未来发展提供一个样板。

Related postings 相关文章:

◙ BYD Toots Electric Horn in Shenzhen 比亚迪在深圳奏响电动汽车号角

◙ BYD: Running on Empty? 比亚迪：累了？

◙  BYD EV Buses Get German Toehold 比亚迪电动车在德国找到立足点