Thursday, August 03, 2006

Say something for Carlyle Group

As one of the biggest and government official-backed private equity funds in U.S., Carlyle may be already used to political pressure. But I couldn't quite understand why it faces so much hurdle in its deal in China.

I remembered cleard a classmate from U.S. once told me the nationalism among Chinese is very dangerous. I was angry to hear that at first, but then found the words had a point. In fact, as Chinese suffered a lot in the war before 1950s, they knew they have to love their nation as much as they can in order to survive. But the fact is that the country becomes bigger now, which means the nation needs to do things to strengthen herself, instead of just protecting herself. But most Chinese still hate Japan, though Japan has taught Chinese a lot of the industrilization and corporate governance. Governments, unfortunately, make use of this kind of nationalist to play on the politics.

Now, it is the same with foreign merge & acquistions in China. Government is afraid that it will lost control on the state-owned companies after selling stakes to foreign investors. So it tells people that it will do harm if foreign investors buy into the company. And then many people protest again, just like they did to the Japanese.

But people should try to investigate before making a judgement. Like Carlyle's deal to Xugong group, one of the biggest heave machine makers in China. Carlyle wants it, Xugong wants it, and even the local government wants it. Then why central government couldn't make a decion in the period as long as three months? Some competitors even said Xugong was sold cheaply. But that's not a reason, isn't it? When foreign investors first came to China in 1990s after Deng Xiaoping made the decision, they also thought China's things are cheap, the reason why they came and buy factories. Why people at that time didn't say the state-owned companies are sold cheap? More important, what Carlyle will bring will be a transparent governance system, which will be much better than a non-transparent company where a lot of bribery will happen?

I am not a Carlyle fun, but just want to make a balance when all the Chinese newspaper which blamed Carlyle all day and when Carlyle hasn't said anything. Today people even argued that Pacific Insurance, in which Carlyle bought a stake a few years before, was also sold cheap. Come on, a bread in China now is sold at least five times expensive compared with years ago, and why couldn't a company? If someone wants to sell and someone wants to buy, the deal should be made, and that's called market economy.

6 comments:

Lutz_W said...

Hi Amy,
as far as I remember the Carlyle Group houses (or at least used to house) a lot of members of the US-govt. I guess they should have some entanglements with the government and the secret services -- should be logical to me as they are not only playing as private equity but also empowering weapons-construction.

Now, after IBM/Lenovo was ever declined in the USA because of something like "security issues", it doesn't surprise me that PRC makes a similar move on the Carlyle Group now...

If this is wise for both sides in the end, is another story to me, hoho...

:P <- Lutz

djhhkk said...
This comment has been removed by a blog administrator.
djhhkk said...

Some competitors even said Xugong was sold cheaply. But that's not a reason, isn't it? -- why wouldn't?

When foreign investors first came to China in 1990s after Deng Xiaoping made the decision, they also thought China's things are cheap, the reason why they came and buy factories. Why people at that time didn't say the state-owned companies are sold cheap? -- You once had to do something because you had no other opitions, or good did more than harm, but this didn't necessarily mean you were happy by doing so and kept doing so.

More important, what Carlyle will bring will be a transparent governance system, which will be much better than a non-transparent company where a lot of bribery will happen? -- not all people from Xugong welcomed this take-over. Aaverage labors made their own sacrifice to benifit the managers, wouldn't you call this corruption?

I am not a Carlyle fun, but just want to make a balance when all the Chinese newspaper which blamed Carlyle all day and when Carlyle hasn't said anything. Today people even argued that Pacific Insurance, in which Carlyle bought a stake a few years before, was also sold cheap. Come on, a bread in China now is sold at least five times expensive compared with years ago, and why couldn't a company? -- you made an analogy between bread and this BIG comapany? you are kidding me, aren't you? you really think they are parallel?

If someone wants to sell and someone wants to buy, the deal should be made, and that's called market economy. -- That should be called stupid, I'm afraid. You never wanted to study SAT cuz you wanted to play, but your parents urged you to. --> if you did well in SAT, you might go to Harvard, otherwise you might need to go to a local staples, what would you say?. Also, think about some of those super tycoons in Russia.

Amy or koala said...

Thanks for your careful reading, djhhkk. First, I would like to say what I wrote on my blog is personal opinion, not fair comment. I will not call any company or individual for comments on the story, which is different if I write a story on my paper.

Second, I respect you comments. But as I said, this is just opionion. Both you and me are just outsiders from Carlyle and Xugong. But as I argued, China has already opened more and more sector to foreign investors. Of course, it couldn't do all good to China, but the country couldn't suddenly stop the reform, which will harm everyone.

Marcel Ekkel said...

Hi Amy,


See if you can get a copy of the book "confessions of an economic hitman"

This might give some insight on how certain BIG US companies work (too) tight with US government to achieve their agenda's

Amy or koala said...

thanks, Marcel, I will take that advice to look for that book. you are also in HK?