GM calls off plan to sell India car plant to China's Great Wall
By Aditi Shah
NEW DELHI/SHANGHAI (Reuters) -General Motors (GM) said on Friday it had called off the sale of a shuttered Indian plant to China's Great Wall Motor after they failed to obtain regulatory approvals, amid a tougher stance by New Delhi towards investments from Beijing.
GM struck a deal in January 2020 to sell the plant to Great Wall, with the Chinese SUV-maker expected to pay up to $300 million as part of a broader plan to invest $1 billion to establish a presence in India's growing car market.
The agreement, which was extended twice, expired on June 30.
"We have been unable to obtain the required approvals within the time frame of the deal," George Svigos, executive director of communications at GM International, told Reuters.
"Our strategy in India remains unchanged and we will now explore further options for the sale of the site," he said, adding the company "hopes to achieve a price that reflects the value of the asset".
"Great Wall Motor will keep its attention to the Indian market in the future and continue looking for new opportunities," the Chinese automaker said in a statement on Friday, while confirming the termination of the plant deal.
The Indian government did not immediately respond to emails seeking comment.
GM's deal with Great Wall was agreed just months before India toughened its stance in April 2020 on investment from neighbouring countries including China, making them the first major casualty of the move that has held up billions of dollars of capital inflow in sectors such as automobiles and technology.
This was part of a broader crackdown by India on businesses with Chinese links amid worsening diplomatic relations. Separately, New Delhi also banned more than 300 Chinese mobile apps, including TikTok, over security concerns.
"It is hoped that the relevant countries will properly honor their commitment to openness and cooperation and provide a fair, just and non-discriminatory business environment for foreign investors,” China's Ministry of Foreign Affairs told Reuters when asked to comment on the matter.
The move draws a line under a more than two-year effort by GM and Great Wall, forcing the U.S. firm to restart its hunt for a buyer while it continues to spend money on maintaining some machinery and tooling in the factory.
Asked if the plant could be used to make electric vehicles, Svigos said it was suitable for a number of industrial uses, including by non-automotive companies, and GM would explore all options.
GM, which stopped selling cars in India at the end of 2017, has already sold its other plant to SAIC Motor Corp, where the Chinese automaker builds cars under its British brand, MG Motor.
This will also send Great Wall back to the drawing board on its plans to enter India, which it considered an important part of its global strategy to break into new markets like Latin America, Thailand and Brazil.
Last year, Great Wall re-allocated to Brazil a portion of its $1-billion investment earmarked for India and reassigned some of its staff after delays in winning government approvals.
(Reporting by Aditi Shah, Zhang Yan, Martin PollardEditing by Mark Potter and Kim Coghill)
UPDATE 1-China's Great Wall Motor shelves $1 bln India plan -sources
Fri, July 1, 2022
By Aditi Shah
NEW DELHI, July 1 (Reuters) - China's Great Wall Motor has shelved plans to invest $1 billion in India and laid off all employees at its operations there after failing to obtain regulatory approvals, three sources with direct knowledge of the matter said on Friday.
The Chinese automaker has been planning to enter the Indian market since 2020 but now becomes one of the biggest casualties of New Delhi's increased scrutiny of investments from Beijing.
Without directly commenting on the exit, a Great Wall statement said the company "would like to thank all the members of Indian team for their contribution", adding that it would continue to study the Indian market and look for opportunities in the future.
Great Wall's India entry plan was announced with great fanfare during the country's biennial auto show in January 2020. India was a key market for the Chinese SUV manufacturer's global expansion plans and the company had envisioned a plant that would be its biggest outside China.
Months later, after Great Motor began hiring staff in India, New Delhi increased scrutiny of investments from countries with which it shares a land border to deter opportunistic takeovers during the COVID-19 pandemic.
The crackdown deepened after a border clash between India and China later that year, which has since held up billions of dollars of capital inflow in the auto and technology sectors among others.
The sources, who declined to be named, said that Great Wall laid off about a dozen employees at its Indian business on Friday after telling them it had failed to obtain foreign direct investment approval from the government to buy a former General Motors (GM) plant in the country.
Earlier on Friday Great Wall and GM called off the plant deal, drawing a line under a two-year initiative.
An Indian government spokesperson could not immediately be reached for comment outside regular business hours.
The axed employees were working on the company's planned India entry in departments including finance, strategy and marketing, two of the sources said, adding that they are to be given three months' severance pay.
Great Wall's patience had been waning since last year. In August it allocated to Brazil a portion of its planned $1 billion India investment and reassigned some of its staff.
The company's research and development centre in the southern Indian city of Bengaluru is operating as normal, it told Reuters earlier on Friday. (Reporting by Aditi Shah Editing by Mark Potter and David Goodman)
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