China starts consolidation of firms in critical industries

The Chinese government has started to consolidate firms in the steel, automobile, telecommunications and other key industries in order to create giant enterprises out of several state-run companies. In the automobile industry, where prices have fallen significantly due to overproduction, Shanghai Automotive Industry Corp. (SAIC), the nation’s largest automaker, acquired mid-size firm Nanjing Automobile (Group) Corp. in compliance with the government’s consolidation policy. “The Chinese government thinks companies can beat foreign multinationals in the global market if they grow in size,” said Hironori Uchibori, an associate professor at Hakuoh University who is familiar with Chinese corporate strategies. (June 16, 2008)