Though hardly the biggest story to come out of the Korean Peninsula today (that would be the news that Bill Clinton has secured the release of two American journalists sentenced to 12 years of hard labor in North Korea), there was an interesting piece in today’s New York Times about a police raid on South Korean automaker Ssangyong’s factory. Unionized workers had locked out management for two months after the company had gone bankrupt. Some quick details of the melee: Workers fired nuts and bolts from slingshots, launched fire bombs, and have now barricaded themselves in a fireproof warehouse where they are willing to "die together." I think it’s fair to say the South Koreans can strike with the best of them.
Ssangyong was purchased by Shanghai Automotive Industry Corp (SAIC) back in 2004, an acquisition now widely seen as a failure. We touched on the Ssangyong deal in a story that ran in our April issue, back in the days when Sichuan Auto was rumored to be in the market for an acquisition of Hummer. Now an equally obscure Chinese company – Sichuan Tengzhong Heavy Industrial Machinery – is in the bidding for Hummer, and Beijing Automotive Industry Holding (BAIC) is reportedly eyeing Volvo. The recent clashes at Ssangyong may serve as a cautionary tale and illustrate the the difficulties Chinese firms face in running foreign businesses post-acquisition. To say there was acrimony between Chinese managers and the Korean workforce is something of an understatement: Ssangyong workers held Chinese executives hostage for seven hours in December. At issue was the perception that SAIC never intended to resurrect the company, but merely steal technology and bring it back to the mainland. Given that intellectual property rights were also at the heart of BAIC’s failed bid for Opel, it’s clear that Chinese firms must overcome the feeling among many that their overseas acquisitions are merely smash and grab operations.