China may soon tighten one other knot in its business ties with Malaysia.
Zhejiang Geely Holding Group Co., the Chinese carmaker that owns Volvo Cars, is preparing a proposal to accumulate a majority stake in Malaysian carmaker Proton Holdings Bhd., based on people accustomed to the situation. French Group PSA, which produces Peugeot and Citroën cars, announced on Tuesday that it had submitted a proposal.
China’s economic influence in Malaysia is growing because of a series of deals concluded lately. Geely executives recently visited Proton’s office in Malaysia, said one person accustomed to the bidding process. Geely’s public relations manager, Ash Sutcliffe, declined to comment on Proton.
Proton’s owner DRB-Hicom Bhd. said earlier this month that it expects to pick a foreign strategic partner for the unit in the primary half of the 12 months. The Malaysian automotive and defense conglomerate, controlled by Syed Mokhtar Al-Bukhary, didn’t name the parties involved, although local press linked each PSA and fellow French manufacturer Renault SA to Proton.
“Assuming control of Proton would make good strategic sense for Geely as a play for the Southeast Asian market,” where greater than 630 million people live, said Yale Zhang, managing director of Automotive Foresight. Cars made in any of the ten members of the Association of Southeast Asian Nations will be sold duty-free throughout the bloc.
While automakers from Europe, Japan and the United States have already got a powerful presence within the region, Chinese manufacturers are struggling abroad.
Proton was founded within the Eighties as a national industrial leader by a government that wanted Malaysia to be amongst Asia’s fast-growing “tiger” economies reminiscent of Japan, South Korea and Singapore. With Kuala Lumpur’s support, Southeast Asia’s only carmaker dominated its domestic market, however it struggled to show a profit and its dreams of regional sales of the Proton got here to nothing when the “Asean automobile” got here to nothing.
Still, it stays an emblem of national pride and a sale to Geely would highlight China’s growing economic clout in Malaysia, said Zhang Baohui of Lingnan University in Hong Kong.
“China is certainly gaining influence in Malaysia,” Mr. Zhang said. “Money motivates Malaysia to redefine its China policy.”
During a November visit to Beijing, Prime Minister Najib Razak signed deals price $34 billion, including an order for 4 Chinese naval ships and a high-speed rail line price $12.3 billion, which Beijing will finance on favorable terms. A 12 months earlier, China agreed to a $2.3 billion rescue package for 1MDB, the scandal-hit Malaysian government investment fund.
In 2012, DRB-Hicom bought a stake in Proton from Malaysian wealth fund Khazanah Nasional Bhd. for roughly $412 million.
Sales at Proton, which also owns British sports and racing automobile brand Lotus, proceed to say no as debt increases. Earlier this 12 months, the Malaysian government prolonged aid price $282 million on the condition that it herald a foreign partner.
Source: http://www.marketwatch.com/story/chinas-geely-plans-bid-for-malaysias-proton-2017-02-21
Write to Yantoultra Ngui at [email protected]Trefor Moss w [email protected] and Kane Wu w [email protected]
source: http://www.marketwatch.com/story/chinas-geely-plans-bid-for-malaysias-proton-2017-02-21
