The uncertain global economy isn't the only hurdle for SsangYong Motor to clear this year. South Korean politicians are putting up another.
Some lawmakers from opposition parties want the National Assembly to look into a possible accounting fraud by Shanghai Automotive Industry Corp., or SAIC, the previous owner of Ssangyong, which is South Korea's fourth-biggest car maker by output. (There are generally considered to e five companies making cars in South Korea, though Hyundai and Kia have the same parent company.)
The lawmakers argue SAIC artificially or wrongfully boosted its losses in order to enter a bankruptcy court and exit their ownership of Ssangyong. They also say SAIC ran away with core technologies without making an investment in SsangYong.
SAIC gave up the company, which it had bought for about 600 billion Korean won ($550 million) in 2004, when the bankruptcy court took over control of SsangYong in 2009. Mahindra & Mahindra of India acquired the company for 523 billion won in 2010 and SsangYong graduated from court protection in 2011.
In January, Mahindra & Mahindra said it will invest more than 1 trillion won in the next four years in SsangYong. In the past two years, it already injected 350 billion won in its South Korean unit to launch several facelift models such as the Rexton W sport-utility vehicle and the 11-seat Korando Turismo recreational vehicle. SsangYong aims to sell 149,300 units this year, up 24% from a year earlier.
SsangYong's operating losses narrowed to around 90 billion won last year from 145 billion won a year earlier due to increased exports to emerging markets such as Russia and Chile.
SsangYong and its union say they don't need the hassle of a parliamentary investigation and believe they are embroiled in political strife between the ruling and opposition party. The ruling Saenuri Party initially agreed with the idea of a parliamentary probe last year but changed its tune last month.
"Opposition lawmakers are making use of SsangYong's past case in order to attack the ruling party," SsangYong Motor union leader Kim Kyu-han said in an interview. He said the politicians are "not helping the company but shaking it."
SsangYong Motor President Lee Yoo-il said the company is having a difficulty in negotiations with dealers to raise prices due to a political dispute that "has nothing to do with the company's business."
Some dealers expressed concerns that the political strife is making it difficult for the company to move forward.
"We'd like to leave the past in the past, and focus on the bright future," said Deon Cooper, a dealer from New Zealand where sales of SsangYong's vehicles soared by 300% a year in the past two years.
For the politicians, part of the issue is that the auto company hasn't rehired several hundred workers who were laid off while it went through bankruptcy.
The politicians themselves have done little to help Ssangyong's business, ironically. Most members of the National Assembly use cars from Hyundai Motor Co. and Kia Motors Corp., the country's two major car makers.
The political clouds over SsangYong won't likely blow over soon.
The United Progressive Party and the Progressive Justice Party, two minor opposition parties, said they will continue to go ahead with a parliamentary probe of SsangYong even after the new Park Geun-hye government comes to power late this month.
Politicians Create New Uncertainty for SsangYong - Korea Real Time - WSJ
How China committed the Theft?
China's Shanghai Automotive Industry Corporation (SAIC), the former majority owner of Ssangyong Motor, has stolen hybrid car technology as well as diesel engine and transmission technology from the Korean carmaker's key SUV model Kyron, the Seoul Central District Prosecutors' Office said Wednesday. Prosecutors placed a Chinese vice president sent to Ssangyong from SAIC who allegedly orchestrated the siphoning off of key technology on a wanted list, and indicted seven senior researchers at Ssangyong for handing over the information.
Suspicions of the technology theft surfaced in 2006, when Ssangyong's union accused the carmaker's SAIC-appointed head and eight other managers of negligence. The union said the Chinese carmaker had failed to live up to a promise to invest W1 trillion (US$1=W1,158) made when it acquired management control in 2005 and was only interested in stealing key automotive technology.
Immediately after acquiring Ssangyong, SAIC combined the Korean automaker's computer system with its own, raising suspicions that the move was designed to steal blueprints of new models and other technological information. At the time, SAIC issued a statement denying the accusation, which it said were the result of "misunderstanding and prejudice." Now it appears the charges were true.
[SIZE=3The technology SAIC stole from Ssangyong involves the Hybrid Control Unit that automatically controls all vehicle systems, including engine and transmission, optimizing fuel efficiency and performance. The government had designated that technology as part of the country's new growth engines and funded 50 percent of research costs or W6 billion.[/SIZE] That is why it is forbidden to use or transfer that technology without government approval. SAIC signed no contracts nor was it licensed to transfer or use that technology, yet the Chinese vice president used his company's position as the majority shareholder to pressure automotive researchers to e-mail detailed information to China.
The acquisition of valuable technology can be one of the perks of corporate acquisitions. But SAIC and Ssangyong were separate corporate entities, making it a criminal offense to transfer technology without the necessary contracts. And when Ssangyong's financial situation worsened, SAIC in January simply tossed the Korean automaker into court receivership and fled. Ssangyong workers staged a 77-day sit-in at the carmaker's factory protesting against layoffs. Its future remains uncertain. SAIC's takeover of Ssangyong is a textbook example of an acquisition for the sole purpose of stealing technology.
The Chosun Ilbo (English Edition): Daily News from Korea - SAIC's Takeover of Ssangyong Was Simple Theft
Some lawmakers from opposition parties want the National Assembly to look into a possible accounting fraud by Shanghai Automotive Industry Corp., or SAIC, the previous owner of Ssangyong, which is South Korea's fourth-biggest car maker by output. (There are generally considered to e five companies making cars in South Korea, though Hyundai and Kia have the same parent company.)
The lawmakers argue SAIC artificially or wrongfully boosted its losses in order to enter a bankruptcy court and exit their ownership of Ssangyong. They also say SAIC ran away with core technologies without making an investment in SsangYong.
SAIC gave up the company, which it had bought for about 600 billion Korean won ($550 million) in 2004, when the bankruptcy court took over control of SsangYong in 2009. Mahindra & Mahindra of India acquired the company for 523 billion won in 2010 and SsangYong graduated from court protection in 2011.
In January, Mahindra & Mahindra said it will invest more than 1 trillion won in the next four years in SsangYong. In the past two years, it already injected 350 billion won in its South Korean unit to launch several facelift models such as the Rexton W sport-utility vehicle and the 11-seat Korando Turismo recreational vehicle. SsangYong aims to sell 149,300 units this year, up 24% from a year earlier.
SsangYong's operating losses narrowed to around 90 billion won last year from 145 billion won a year earlier due to increased exports to emerging markets such as Russia and Chile.
SsangYong and its union say they don't need the hassle of a parliamentary investigation and believe they are embroiled in political strife between the ruling and opposition party. The ruling Saenuri Party initially agreed with the idea of a parliamentary probe last year but changed its tune last month.
"Opposition lawmakers are making use of SsangYong's past case in order to attack the ruling party," SsangYong Motor union leader Kim Kyu-han said in an interview. He said the politicians are "not helping the company but shaking it."
SsangYong Motor President Lee Yoo-il said the company is having a difficulty in negotiations with dealers to raise prices due to a political dispute that "has nothing to do with the company's business."
Some dealers expressed concerns that the political strife is making it difficult for the company to move forward.
"We'd like to leave the past in the past, and focus on the bright future," said Deon Cooper, a dealer from New Zealand where sales of SsangYong's vehicles soared by 300% a year in the past two years.
For the politicians, part of the issue is that the auto company hasn't rehired several hundred workers who were laid off while it went through bankruptcy.
The politicians themselves have done little to help Ssangyong's business, ironically. Most members of the National Assembly use cars from Hyundai Motor Co. and Kia Motors Corp., the country's two major car makers.
The political clouds over SsangYong won't likely blow over soon.
The United Progressive Party and the Progressive Justice Party, two minor opposition parties, said they will continue to go ahead with a parliamentary probe of SsangYong even after the new Park Geun-hye government comes to power late this month.
Politicians Create New Uncertainty for SsangYong - Korea Real Time - WSJ
How China committed the Theft?
China's Shanghai Automotive Industry Corporation (SAIC), the former majority owner of Ssangyong Motor, has stolen hybrid car technology as well as diesel engine and transmission technology from the Korean carmaker's key SUV model Kyron, the Seoul Central District Prosecutors' Office said Wednesday. Prosecutors placed a Chinese vice president sent to Ssangyong from SAIC who allegedly orchestrated the siphoning off of key technology on a wanted list, and indicted seven senior researchers at Ssangyong for handing over the information.
Suspicions of the technology theft surfaced in 2006, when Ssangyong's union accused the carmaker's SAIC-appointed head and eight other managers of negligence. The union said the Chinese carmaker had failed to live up to a promise to invest W1 trillion (US$1=W1,158) made when it acquired management control in 2005 and was only interested in stealing key automotive technology.
Immediately after acquiring Ssangyong, SAIC combined the Korean automaker's computer system with its own, raising suspicions that the move was designed to steal blueprints of new models and other technological information. At the time, SAIC issued a statement denying the accusation, which it said were the result of "misunderstanding and prejudice." Now it appears the charges were true.
[SIZE=3The technology SAIC stole from Ssangyong involves the Hybrid Control Unit that automatically controls all vehicle systems, including engine and transmission, optimizing fuel efficiency and performance. The government had designated that technology as part of the country's new growth engines and funded 50 percent of research costs or W6 billion.[/SIZE] That is why it is forbidden to use or transfer that technology without government approval. SAIC signed no contracts nor was it licensed to transfer or use that technology, yet the Chinese vice president used his company's position as the majority shareholder to pressure automotive researchers to e-mail detailed information to China.
The acquisition of valuable technology can be one of the perks of corporate acquisitions. But SAIC and Ssangyong were separate corporate entities, making it a criminal offense to transfer technology without the necessary contracts. And when Ssangyong's financial situation worsened, SAIC in January simply tossed the Korean automaker into court receivership and fled. Ssangyong workers staged a 77-day sit-in at the carmaker's factory protesting against layoffs. Its future remains uncertain. SAIC's takeover of Ssangyong is a textbook example of an acquisition for the sole purpose of stealing technology.
The Chosun Ilbo (English Edition): Daily News from Korea - SAIC's Takeover of Ssangyong Was Simple Theft
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