GM wants to buy into Russian carmaker
It is increasingly evident that the real General Motors strategy is focusing on so-called emerging markets, not on the United States. The lastest item of evidence in support of that proposition is word in the Wall Street Journal today that GM has acknowledged that it is bidding for a stake in Russian automaker OAO Avtovaz. GM’s spokesman declined to say the amount which GM is bidding or the size of the stake it seeks, beyond merely stating that the GM offer is “competitive.” He did, however, describe this as part of an effort to “extend our presence” in Russia.
Foreign investors have found it difficult to ignore the Russian market, but also found it difficult to deal with the Vladimir Putin regime, which is corrupt to the marrow of its bones. Putin used trumped up tax evasion charges to imprison in Siberia the richest man in Russia and confiscate his oil company, distributing its parts among his crony’s he also forced Shell to abandon its substantial investment in Russian oil fields in exchange for payment that was a fraction of it’s true worth. One of Putin’s favored buddies with an unsavory past has quietly taken a 5% stake in General Motors common stock.
Auto companies seem in a hurry to invest in China and Russia, seemingly ignoring the nature of the governments in these countries. Only this past week, Putin’s government imprisoned former chess champion Gary Kasparov because he has been an outspoken critic of Putin. The Russian elections of the past week are generally conceded by all, except Putin, to have been completely rigged.
China seems intent on polishing its public image with the Olympics, yet it maintains a government which is among the most repressive in the world, a government which also seeks to spy on the West. Only this past week, the head of the British intelligence service, MI5, warned Britain’s top executives and bank security experts that their computer networks are being cyber-attacked by Chinese intelligence. The Pentagon has previously disclosed similar attacks directed at it by the Chinese.
These, then, are the people and governments upon which it seems General Motors is betting its future.
It is a foolish bet.