ASIAdocument.write(“” + m[today.getMonth()+1]+ ” “+ today.getDate()+”, ” + theYear + ” “);HOMECHINAWORLDBUSINESSLIFESTYLECULTURETRAVELSPORTSOPINIONREGIONALFORUMNEWSPAPERChina Daily PDFChina Daily E-paperChina Daily Global PDFChina Daily Global E-paperWhats in a name? Joint ventures try an image boost
By Li Fusheng ( China Daily )
Updated:2015-12-21 07:53:56
Comments Print Mail Large Medium SmallThose who believe in feng shui are convinced that certain names bring good luck, but experts say the mysterious Chinese philosophy will not work when it comes to automakers market value.Shanghai Volkswagen, the joint venture between Shanghai Automotive Industry Corp and German automaker Volkswagen, said it changed its name to SAIC Volkswagen from Dec 11.The company said in a statement that the name was changed to “boost the companys image”, and there is no change to its business or equity. Established in 1984, it is the earliest extant joint venture in Chinas auto industry.The move came four months after another of the auto groups joint ventures changed its name from Shanghai GM to SAIC GM.Both moves were part of the Shanghai-listed companys efforts to boost its value.Chen Hong, SAIC Motors chairman, said the automaker was “gravely undervalued” when he took over the company in 2014 and has since made it a priority to enhance its value in the capital market.The group topped the list of Chinese automakers in the first 11 months of 2015 by selling 5.21 million vehicles, but its performance in the stock market has been lackluster.Statistics show that its price-to-earnings ratio was 8.03 on Dec 17 while the average figure of listed Chinese automakers the same day was 21.9.Changing name alone will not help, said Zhang Zhiyong, a Beijing-based independent auto analyst.”It will give little help to its value. A companys value is based on its performance, which is in turn based on its research and development, products, and sales network,” Zhang said.”Besides, the core of the group is its own brands, not those joint ventures. So SAIC Motor should settle down to improve the quality of products with its own labels.”In addition to the models from its joint ventures, SAIC Motors passenger unit produces MG and Roewe vehicles, although they contribute little to its total sales.In November, the auto group sold 595,000 vehicles, with those of its own brands accounting for barely more than 20,000 units.While some argue that the new names of the joint ventures will enhance brand awareness for SAIC Motor and thus help boost sales of its own cars, Liang Ping, an auto analyst at Changjiang Securities, said that logic will not work.”Large shareholders are institutional investors. There is no chance that they didnt know Shanghai Volkswagen is a joint venture between SAIC Motor and Volkswagen,” he said.”So the name changing might trigger small fluctuations of its stock price, but will not help its market value in the long term.”SAIC Motor is not the first automaker to change the names of its joint ventures. Guangzhou Automobile Group Company replaced the name Guangzhou with GAC in its partnerships with Honda and Toyota in 2008.Zhang said the only thing such name changing might do is to enhance the Chinese companies “sense of importance” as time passes.Foreign companies are required to partner with Chinese ones if they want to produce cars in China.He said place names were often part of the company name as the partnership was of great importance not only to the Chinese automaker, but also to the city government or even the country when the joint ventures were established decades Daily 12/21/2015 page18)8.03KHot WordsPing-pong Olympic Champion in dispute with club over unpaid bonusesWant to divorce? 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