SEOUL — Is General Motors failing where its rival Ford Motor has already failed?
The question apparently haunts the minds of people closely observing the latest development or rather the lack of development in connection with Korea’s efforts to sell the insolvent Daewoo Motor.
With Hyundai Motor all but giving up its bid, due to its strategic partner Daimler-Chrysler’s reluctance; GM, the world’s largest automaker, remains just about the only contender.
GM seems to be enjoying itself to the fullest, being the only prospective buyer in the buyer’s market.
Despite two years of exclusive negotiations with Daewoo Motor and months of due diligence in the Daewoo’s creditors-organized bidding, GM says that it needs more time to take another look at its former partner for 10 years.
Rick Wagoner, GM’s chief executive officer, told Korean reporters during the ongoing Paris Motor Show, that GM might have to spend the rest of the year before deciding whether to proceed with its bidding or not. Despite speculation that it stumbled on hidden debts and decided to bow out of the deal, Ford itself has failed to come up with even a lame excuse.
GM’s press handlers repeat that the situation is the same as it was before and that they don’t have anything further to say.
Therefore, the creditors are biting their nails and racking their brains in order to rekindle GM’s interest in Daewoo Motor.
Their collective anxiety is understandable in that they have to spend more than 100 billion won per month to keep Daewoo Motor going. Daewoo Motor, which can’t pay the bills with its sales, couldn’t pay wages last month, either.
Perhaps, it is only natural that one should enjoy advantages while they are available.
In this context, GM’s behavior should be regarded as nothing out of ordinary — squeezing the best deal possible. By many indications, GM would likely get Daewoo Motor on its terms.
It is also plausible that GM, the cream of the U.S. capitalist spirit, needs time to convince its shareholders of the wisdom in its management’s decision to bring Daewoo Motor under its fold.
After all, on June 29 when Ford walked away from the Daewoo deal, GM saw its share price falling on the apparent judgement on the part of market participants that GM would likely grab Daewoo Motor.
But GM’s shares already suffered a setback when its board decided to go for the troubled Korean car maker before.
Maybe, GM might be feeling a need to mend its fences after undergoing an attack by a financier aimed at taking over one of the world’s largest corporate goliath.
Or the least possibility is that GM might be feeling vindictive after a humiliating loss at the hand of Ford in the preliminary round of bidding to the surprise of many knowledgeable experts.
But the more important than all above-mentioned possibilities for GM is that it is most likely to do business in Korea as owner of one of the largest conglomerate employing large workforce.
In other words, it has an image to be concerned with. The image of good corporate citizen could turn out to be more desirable than a few dollars to shave off, so to speak.
By many accounts, when it gave up its bid for Daewoo Motor, Ford forsook a piece of its good image and bared its predatory corporate face typical of a big multinational. Admittedly, Ford’s shares rose on the back of its aborted bid, apparently persuading investors that it is in earnest trying to resolve its most pressing issue related to its alleged involvement in the defective tire scandal. Ironically, Ford’s involvement in the tire scandal is in a way an issue about its corporate image and corporate conscience.
GM might be making the same mistake, stalling on its bid for Daewoo Motor or just giving impressions that it is doing so.
Now, GM faces a time to decide.
It might buy Daewoo Motor at a firesale price, should it stall and nitpick the details.
Or it could improve its image of a profiteering U.S. corporation and emerge as a responsible corporate citizen. Something its rival Ford failed to do, when it abruptly walked away from the Daewoo deal, plunging the Korean economy into a temporary chaos.