WCA July 2009

by the Inter-American Bank in 2008. According to the oil company, Brazil is expected to apply the Chinese loan to offshore exploration, while agreeing to export as much as 100,000 barrels of oil a day to China. Messrs Romero and Alexei Barrionuevo pointed out that ❖ ❖ China has also pushed into Latin American countries where the US has negligible influence, like Venezuela. In February, they wrote, China’s vice president, Xi Jinping, met in the Venezuelan capital of Caracas with President Hugo Chávez, who has become the focal point of anti-US sentiment in Latin America. It was then announced that “a Chinese-backed development plan based in Caracas would grow to $12 billion from $6 billion, giving Venezuela access to hard currency while agreeing to increase oil shipments to China to one million barrels a day from a level of about 380,000 barrels.” Mr Chávez’s government claims that the Chinese aid differs from other multilateral loans in avoiding such requirements as scrutiny of internal finances. Even so, the Chinese fund has generated criticism among domestic opponents of the arrangement on grounds that it permits China to lock in low prices for the oil Venezuela is using as repayment. China’s care for its own interests may be taken for granted. But its advance into Latin America has a remarkable feature, noted by the Times : “Despite forging ties to Venezuela and extending loans to other nations that have chafed at Washington’s clout, Beijing has bolstered its presence without bombast – perhaps out of an awareness that its relationship with the United States is still of paramount importance.” Toyota is said to mull reorganisation of its US operations to reduce duplication costs According to a report in the Detroit Free Press (8 th April), in advance of its annual shareholders’ meeting, in June, Toyota Motor Corp was weighing a revamping of its North American operations that would place engineering, manufacturing, and sales operations under one executive. Sources with knowledge of the plan suggested that the new organisation may be led by a returning executive, Yoshimi Inaba, who spent years in the United States and was once considered a candidate for the Japanese auto maker’s top job. The idea of an umbrella North American organisation has been discussed for some time within Toyota, which began selling cars in the US in 1959 and whose operations now include a technical centre in Ann Arbor, Michigan; a manufacturing headquarters in Erlanger, Kentucky; a corporate office in New York; and a government affairs office in Washington. Writing from Detroit in the New York Times (10 th April), Micheline Maynard noted that each outpost has its own staff and set of executives, a structure that “has led to duplication at a time when Toyota, like other global auto companies, is striving to cut costs.” Automotive

The incoming president, Akio Toyoda, grandson of the founder of Toyota Motor Corp, has pledged to get off to a fast start and address the duplication. The assignment of broad North American responsibilities to Mr Inaba would appear to be in line with this approach. Ms Maynard pointed out that there is debate within Toyota about the need for an umbrella organisation. Some North American executives have argued that their operations ultimately report back to executives in Japan, and that another layer in North America might further slow decision making. Elsewhere in automotive . . . General Motors Corp, which plans to shutter 15 factories ❖ ❖ in the US by 2013, expects to double its sales in China to more than 2 million vehicles a year over the next five years by adding more than 30 new and upgraded models. The Detroit auto maker planned to show no fewer than 37 production and concept models at the Shanghai Motor Show (22 nd to 28 th April). In March, even as its US car sales dropped by nearly half, GM’s sales in China surged to a record high. The Detroit auto maker revised upward its Chinese market prospects after Beijing cut retail taxes and offered subsidies to help rural residents buy vehicles. China is definitely on course to overtake the US as the world’s biggest auto market. According to the government, Beijing’s plan for stimulating vehicle demand could mean total sales of more than 10 million units this year. CSM Worldwide Inc, the automotive market forecasting firm, cut its US auto sales projection for 2009 to 9.7 million, compared with 13.2 million in 2008. And China is still a young car market. Vehicle ownership per person is only one-third the world average. Warren Buffett believes the car of the future is an affordable electric, and that it will come from China In late September of 2008, Berkshire Hathaway Inc (Omaha, Nebraska) — the conglomerate holding company headed by the admired US investor Warren Buffett — bought 10% of the Chinese company BYD for $230 million. The deal, which awaits final approval from Beijing, did not attract very much attention at the time, although it was noted here. Over the months since, Mr Buffett, widely known as “the sage of Omaha,” has reaffirmed his commitment to the fairly obscure Chinese battery, mobile phone, and electric car company. According to Fortune Magazine, he and two Berkshire partners think BYD “has a shot” at becoming the world’s largest auto maker, mainly selling electric cars, as well as a leader in the fast-growing solar power industry. Fortune‘s Marc Gunther observed that Mr Buffett is particularly impressed by Wang Chuan-Fu, the chemist and Chinese government researcher who launched BYD in 1995 with $300,000. In rental space in Shenzhen, the hub of the global electronics industry, Mr Wang set about manufacturing rechargeable batteries to compete with imports from the Japanese electronics giants Sony and Sanyo.

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Wire & Cable ASIA – July/August 2009