SAIC Motor Corporation, the biggest Chinese automaker, may soon buy stakes in GM once its stocks go public. This idea is causing a stir because the U.S. government, which has a 61% stake in GM from the bailout, is worried that selling its stocks to foreign investors may backfire in public anger. If the deal happens, critics could argue that the U.S. government used taxpayer money to allow foreign companies to take a hold of an American company. However, SAIC has close ties with GM. The Chinese company is partners with GM in an auto market that recently became the world’s largest. GM’s August auto sales rose 19% in China from last year amidst the slump in the U.S. and Europe sales. SAIC and GM are also trying to capitalize on the growing market in India.
I agree that the U.S. government will face some criticism that it is basically selling an American company to foreign countries. However, I think the critics should accept the fact that globalization works both ways. The U.S. bought a lot of stocks in foreign companies, and now that more countries are progressing towards first-world status, we should allow them to purchase shares of U.S. companies. The joint venture between SAIC and GM gives SAIC even more of a legitimate reason for its interest. I got a feeling it won’t be long before we see Chinese cars on the road along side American, European, Japanese, and Korean cars.
http://online.wsj.com/article/SB10001424052748703305004575503784053091088.html?mod=WSJ_auto_MiddleSecondHighlights
Globalization is what is fueling this economy. FDI has had a major impact on the American economy recently. This impact is beneficial to American businesses expanding. In the same sense, the Chinese firm's investment in GM will be beneficial. It can help GM gain stability and encourage other foreign companies to follow suit.
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