General Motors and the American Garage Sale

It appears that a little known medium sized Chinese car company, Tengzhong, has acquired the Hummer brand and its American based production facilities. Although there are doubts on how effectively it will run the operation, the fact remains that foreigners will be trying to improve on the quintessential icon of gas inefficiency and resell it back to Americans. Considering that Tengzhong wants to enter the military market to sell hardware to Chinese military, Westerners buying the new Hummers will be indirectly improving effectiveness of Chinese military-industrial complex. Before the stock market crash, the Hummer brand was in the lowly 500-700 million dollar range due to high oil prices. In post-crash America, the Chinese were able to acquire it for about 100 million which is nothing since Chinese state banks often help fund such strategic purchases through favorable loans.

Details are now emerging about the sale of GM's European branch and biggest car company in Europe, Opel. GM's bankruptcy shifted company's resources to core American based assembly lines. Federal authorities will try to engage in rapid retooling of GM's surviving industrial core for production of next generation electric exports. In the meantime, all the assembly lines, car models, and remaining infrastructure deemed unnecessary will be sold off in a historic garage sale. Opel has been acquired by a coalition of Sversbank ( a Russian state bank), Magna ( a Canadian car parts company), and German workers unions with help from the German federal government. Last year, Opel opened a brand new car production line near St. Petersburg hoping to make money from growing sales in a booming oil economy. What ended up happening is that the government of the target economy now has controlling stake in Opel itself with access to all its infrastructure in Europe and with political support from Berlin. By creating a coalition of mutual interests of corporations and governments of America's allies, Moscow was able to swallow up GM's main expansion at incredibly low historical price. Chinese will undoubtedly follow such an example in trying to acquire American corporate infrastructure in their part of the world.

It seems that the Sino-Russian goals are rapidly moving beyond attracting foreign companies to open factories on their land to reduce import monetary outflow and create jobs. Increasingly, it seems that creating incentives for foreigners to open factories in China and Russia was the first step towards long term increase of intracorporate influence. This was best demonstrated when the British oil company, BP, made a partnership with Russian oligarchs by creating an expansion TNK-BP. It didn't expect that a few years down the road their partners will wrestle away control of the expansion and then do what they like with it. This situation twists the arm of the original investor. Since the expansion is not being crudely nationalized in the style of Hugo Chavez, the investor is still receiving increasing profits. Selling the expansion would cut off the flow of profit and allow the natives access to expensive infrastructure at fire sale prices. Sunken costs are too great of a motivator. Profit based strategy requires keeping of the expansion and even increasing technological and expert aid to make sure the rogue branch prospers. TNK-BP is now the third largest oil company in Russia and in the process of opening up brand new oil fields. As its wealth rises, its management will continue to have access to cutting edge technology from the parent company as well as increasing ability to buy Western technical/managerial talent and overall company shares.

GM and Opel show that it is possible for Chinese and Russian societies to compete without necessarily starting from scratch and creating their own technologically advanced international giants. All they have to do is acquire state aid for a large enough company that can make a domestic partnership with a foreign company's expansion. This process creates a very profitable expansion that is under control of governments working towards a multi-polar world. It allows not just rapid technological transfers and business know-how but indirect influence over Western governments through corporate proxies. Major industrial giants will pressure their respective governments to go easy on Beijing and Moscow in terms of protectionism, trade, and geopolitical policy. The recession has shown that the final strategic outcome of this can be full take over of Western corporations from within and on their own soil. Once Chinese and Russian corporations (that are often directly tied to their country's military-industrial complex) employ sufficient numbers of American workers and have sufficient mutually interested American allies in the corporate world, their influence would be very difficult to counter. United States and British governments are not structurally designed to counter corporate influence and they don't have enough monetary savings to effectively counter corporate influence even if they had the will.

Conceivably it is very possible for America's geopolitical competitors to buy out and then dismantle American infrastructure citing reasons of "inefficiency". This was a tactic done by General Motors in its early heady days when it bought railroads and trains just to dismantle them and promote its own cars and buses as the best transportation method. Unlike such sabotage being done by a domestic company, possible future sabotage would be done by Chinese (who still have not forgiven American led NATO for killing a million of their men during the Korean War and funding of Chiang Kai Chek during the civil war) and Russians (whose last 5 years focused primarily on systematic multifront revenge for NATO's betrayal in the 1990s).

Over 20% of American steel industry is already primarily owned by Russian steel firms led by Oleg Deripaska. This foot in the door occurred with first cheap sales of steel and then joint take overs of mills and processing facilities on American soil with local corporate partners. The subsequent investment and creation of jobs, combined with American oligarchal allies, allowed influence over local and state governments for further expansion.

Last year, George Bush has signed a deal allowing Russian mining companies to sell uranium to US nuclear plants for the first time in history. The same process that occurred with steel is about to be repeated within a strategic sector necessary for nuclear weapons manufacture. Chinese have not yet made similarly disturbing moves ( from the perspective of nationalist geopolitical survival), although they have twice as much money as the Russians to play around with. This is perhaps because their intracorporate take over attempts will be within the irreplaceable computer and bio-pharmaceutical sectors. After all, important mineral wealth can always be acquired from other sources but a Chinese take over of a company like IBM would allow rapid international rise in prestige.

As of today, America's strategic enemies are rapidly isolating US economy by making alliances with Japanese, Canadians, Persians, Arabs, Germans, French, Indians, and South Americans. Both Beijing and Moscow however will need to act quickly enough to transfer enough technology and wealth out of United States before the depression born nationalist fervor allows for US Federal government to nationalize or otherwise counter foreign influence. It is not yet known what degree of foreign ownership of key industrial and resource sectors the American public will tolerate.