A few years ago when the US Tool & Die industry took a nosedive, the culprit was China. Chinese companies had the ability to underbid just about every American shop. When a shop owner from Erie, Pennsylvania realized what was happening, he decided to investigate. What he found was that Chinese companies had state of the art equipment, impressive facilities, and a labor force that would work for pennies. There was no way to compete with China’s quality or prices. So, what do you do in that kind of situation? If you can’t beat ’em, join ’em. That seems to have been Victor Muller’s plan for saving SAAB.
In his recent article, How Victor Muller sold the Chinese on Saab, Rick Kranz notes that SAAB has been courting the Chinese market since last September. With China at the forefront of the global economy, it was important to find an Asian partner to import the SAAB brand. This was a very good idea but it wasn’t a new one. Buick, BMW, and Volvo, among others, all have ties with China. But this recent deal with Hawtai was different. Muller was selling something that the Chinese companies desperately wanted—a premium European brand.
“[The Chinese] are extremely keen on brand. They are more susceptible to brand image than any nation I know. Brand sets you apart. It says something about you. … The Chinese are running around with their new Armani suits with the label on the outside. Nobody would do that in Europe or America. We would say, hey, you forgot to take off your label. Not so in China. … China is proud of acquiring Volvo because finally the Chinese have managed to acquire what they perceive to be a Western European superbrand. … Hawtai’s taking a stake in Saab is like a supernatural performance, and the Chinese will embrace Saab.”
Are European brands really so iconic that Chinese companies were lining up for the last available premium brand? If you think about it, the same is true on this side of the world. There is a certain mystique about the European car companies. They are known for their craftsmanship and performance. So, I can see how a wealthy Chinese company would be attracted to a chance to have their name connected with SAAB. But that’s not the only reason for their aspirations. Hawtai and the other companies saw the possibility of making money in this venture. The 9-4x will be a big success. The Phoenix platform is right around the corner. If things play out as expected, SAAB will be doing well in a few years. And that, in my opinion, is the biggest reason they invested.
In any event, Victor’s arguments seem to have won them over and the factory is up and running again. And that, my friend, is a good thing.