A planned tie-up MG Rover and Shanghai Automotive (SAIC) has hit difficulties because Chinese regulators are resisting British pressure for a quick decision, according to officials in China.
For the deal to proceed, SAIC needs approval from Shanghai's city government, its owner and the National Development and Reform Commission, the top economic policy-making body in Beijing, which is responsible for foreign investments by state-owned companies.
The regulators appear to have been angered by Rover's decision to reveal it was in negotiations with SAIC. The company has made it known that, far from accelerating approval, the pressure generated by the resulting public debate over the future of the stricken British car-maker has contributed to the delay in getting the regulatory green light.
The difficulties raise questions about whether an announcement can be made before the British general election, expected in May. The prospect of entering the campaign with the fate of up to 6,000 workers, many in marginal constituencies, would alarm the Labour government.
Refusing to comment on possible redundancies, Rover says everything was speculation until the Chinese government agreed the partnership. "We must wait until we get the whole partnership agreement and I can't say when that will be," a Rover official said.
Britain's Department of Trade and Industry declined to comment on job cuts at the Longbridge plant. "Ministers have met senior executives from MG Rover, SAIC and the Chinese government and stressed their support," an official said.
SAIC, with joint ventures with Volkswagen and General Motors, is China's largest carmaker. It was angered by Rover's pre-emptive announcement last November that it had agreed to invest more than €1.45 billion in the British company. SAIC, still digesting its acquisition last year of Ssangyong, the South Korean carmaker, has not disclosed the terms of any deal with Rover but its executives said last year the figure quoted by Rover was far too high. ... - Financial Times