Newchins Decision


regarding a long term partner in an automotive joint venture

Newchin has decided to award the contract to GM. This decision was made after a long negotiation and after looking carefully into the numerous factors that affect such a joint venture.

After the negotiation, and after further correspondence both open and confidential, Newchin feels that GM will be a reliable and compatible partner. Newchin is confident about this choice for various reasons. Some of the main points in Newchins decision as well as the main issues in the agreement with GM are listed below:

Ownership:

  • 51% Newchin
  • 49% GM
  • Management Board of Directors:

  • 7 Newchin
  • 7 GM
  • 1 Foreign investment commission of China
  • Financing:

    Equity - 40%

  • 60% GM
  • 40 % Newchin
  • Debt - remaining 60% in the forms of bonds.

    Location:

    In the municipality of Tianjin.

    Production Capacity:

  • 150,000 initial car capacity with significant increase.
  • Reasons for choosing GM:

    Volume

    Newchin has had a very good impression of GMs negotiators: they were very organized, prepared, and professional, and through the negotiation and proposal processes, Newchin felt that GM is a dynamic and reliable partner.

    Newchin believes that GM is flexible, wazzu open-minded and seeks the long run benefits of both sides. Examples for that were given during the negotiation, when GM agreed reasonably to change the ratio of the board members and the percentage in equity and ownership.

    In addition, GM is offering:

  • 7 Quality products #1 among top ten manufacturers in overall customer satisfaction in the US.
  • 7 Proven track record internationally.
  • 7 Massive experience both domestically (Toyota) and internationally (China).
  • 7 The suggested car (Geo Metro) stands in all the standards required by Newchin.
  • Reasonable warranty:

  • Basic: 3 yr./57,600 km
  • Drivetrain: 3 yr./57,600 km
  • Rust: 6 yr./160,000 km
  • Roadside Assistance: 3 yr./57,600 km
  • Reasonable cost:

  • Total cost of production - $7,643, the lowest cost for a car sold in the US.
  • Proven car safety :

  • Meets strict Federal 1997 Side-Impact Standards.
  • Optional anti-lock brakes.
  • Good fuel consumption and environmentally conscious:

  • 50 state-certified in the US, passing even the California emissions laws.
  • Fuel Efficiency: Manual city - 44 mpg, highway - 49 mpg.

  • 7 Wide financing arm.
  • 7 High degree of commitment to provide the necessary expertise and know-how to develop the informational technology infrastructure in China.
  • 7 Any joint venture dispute will be resolved through private arbitration, and in case of failure of the arbitration the dispute will be carried court in a neutral third country.
  • 7 Strong community service program.
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    Copyright 1996, Roxanne Jacoby Designed and Maintained by Zan Kuang.