Is Yang Rong coming back to China unheeded?
Yang Rong
Yang Rong is one of the Chinese state’s bad boys, not quite an enemy of the state but certainly not a best buddy of those in power. Yang was born in Anhui province and was one of the early founders of Brilliance Automotive which went onto do great things under his leadership, but Yang fell foul of the state when he attempted to move a factory to Ningbo which went against state plans to encourage development in poor regions, especially Brilliance Automotive’s home province of Liaoning. The Liaoning government took over Yang’s assets at Brilliance Automotive due to Yang’s alleged embezzlement of state funds. Now it could be that Liaoning provincial government were upset with Yang’s movement of a factory to Ningbo, or was he really embezzeling funds? Nobody is really quite sure, but it forced his abdication from Brilliance and he went to the USA.
Now it seems that Yang Rong is planning to come back to China to work with Jiang Huai (JAC) to set up a new green automotive venture that will see him return to China after 8 years of self imposed exile in the USA. The JV between JAC and Yang’s company, HKMC, has already been approved which shows that the National Development and Reform Commission no longer see’s him as a criminal.
Whilst in the USA, Yang Rong was involved in a deal to establish a 3,000 acre factory at Bay Minette in Baldwin County, he has set up a deal with Hafei Auto to invest in 2 billion RMB project that will see CNG and hybrid vehicles being built in the USA, and plans to produce 3 million cars per year in the USA. It could be that this deal is actually on the lines, and Yang has switched to JAC now that Hafei auto has come under Chang-an’s ownership.
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Hybrid Kinetic Motors has proposed a GREAT plan to build an auto factory in Alabama and promised a capacity of 3 million cars per year. This is very attractive to the southern state with high unemployment. Now the problem is where does the needed capital come from? Yang Rong has a track record in fund raising but not in this magnitude. He tries to use the US immigration law in capital investment and sells this immigration plan to wealthy Chinese. According to simple calculation, he needs investors in thousands to meet the capital required. His recent road show in China does not come up with promising result. Let us wait and see any new tricks from him.
Bad news to Yang Rong, Italdesign Giugiaro has withdrawn from this project.
The recent JV between HK & JAC to build alternate fuel and hybrid vehicles in China clearly shows Yang Rong’s ambitious plan to have a role in China’s auto industry. Whether the Alabama factory can really materialize depends on the success of this JV.
My guess is HK will introduce its new models in China first to test the quality and performance. After real world field tests and getting satisfactory results, HK will start promoting them in the US to see if its Chinese built cars are acceptable. If sales look promising, the Alabama factory will proceed to assemble the CKD from China. Unlike the transplants of Japan & Korea that employ lots of local parts and labours, HK will remain extremely competitive under CKD assembly.
Such strategy may work for non-premium market segments where customers are looking for value instead of top quality. This is quite a start for a new brand in the mature US market. May be SAIC’s MG-Birmingham operation shown HK a good example. If this Chinese way of auto manufacturing is as successful as other consumer products, the impact to Korean & Japanese auto industry will be tremendous.
SAIC is trying this strategy with MG in the UK, the US will be next. Chery Quantum build a factory in NE near Yellow Sea for export only. Geely and Great Wall focus on export for growth as well. BYD has just opened an office in California for EV sales preparation. Now we have Hybrid Kinetic JAC joining the queue.
I really wish Yang will follow through on his plans to build this car company in the USA. It is unprecedented and will not only improve China-US relations, but it would also change our entire vehicle.
Hybrid Kinetic Motors Co (HK Motors) CEO Wang Chuantao recently refuted claims that his company was incapable of manufacturing natural gas hybrid cars and unable to raise enough funds for the project.
HK Motors and its developers have done extensive research, involving more than 100-patented technologies, according to Wang. FEV, a German engine and power-train design and development firm, will lead the technological development. FEV signed a $250 million contract with HK Motors last year to develop the engine, primarily powered by natural gas.
Wang said FEV, a world leader in the field, is confident it can satisfy HK Motors’ requirements and has even used its assets as collateral for the cooperation.
The much-anticipated technology will be ready next year, and the prototype will debut at a major auto show in 2012.
He said he could not understand why people would think the project was impossible when it combines all the best European technologies, including third-generation natural gas engines.
Wang, once a senior executive at a General Motors division, said big auto companies have not started such an ambitious project because they only want to make small renovations in engines in order to keep the market for their existing products.
Source: China Daily
Geely recruited Jacoby, but can Yang Rong attract the extraordinary talent that he will need to get this off the ground?
Geely needs to set up an international team to manage Volvo(EU division), mind you dragin Volvo(Chinese division) is run by local CEO. Volvo though is owned by Geely, it is still Swedish in nature. There is no need for Geely to employ a western automotive CEO to run a Chinese company. While HK Motors is founded in the US, it is still a Chinese company. I think Yang Rong is in a better position to run his own company. Anyway an ex-BMW CEO is employed to join HK Motors’ management team.
guy is a moron..I hope China arrest him when he landed. That would funny..LMAO
FEV and other design talent aside, HK is going to going to have to recruit veteran production people to bring together the assembly of this unique product. It doesn’t make any difference what country they are from, they just need to know what they are doing in order to make this thing fly.
The ex-BMW CEO is the person you are talking about, he ran the BMW-Brilliance JV factory in Liaoning to make the famous 5 series. This is the guy going to run HK-JAC JV and future grand factory in Alabama.
Found this link from a reporter who passed on suddenly very recently. Not 100% relevant to the thread but does give a few ideas http://wardsauto.com/commentary/what_if_sales_100810/
A 3 million target for HK motors due to production capacity is a good goal but to achieve that they will need to capture almost 4.5% of the US market….. the top 10 models sold in the USA in 2009 was less than 2.5 million combined…. Sure, they could export but achieving such high numbers will take some time.
It’s highly possible Yang Rong is like Wang Chuanfu (BYD)….. absolutely full of s**t and will keep stroking the gravy train with false projections for as long as he can…..
Yes, Wang Chuenfu’s BYD success in last 3 years is an exception in recent auto history and by selling Toyota & Honda clones it will not last. Recent plunge in sales for the last 3 months clearly shows BYD will face a strong setback. BYD shows the ways that any serious auto maker should not follow.
OK, Yang Rong’s Alabama factory is really a big question mark but so far he is working in a proper way to develop his dream cars. German engine technology, Italian styling bodywork, Japanese interior design, Chinese low cost manufacturing, all in all HK is gethering the best in this world into its lineup. We need to give it a try before drawing conclusion. New models from this HK-JAC JV will give us the answer.
Alfred–i saw the latest report is that Yang Rong’s HKMC JV with JAC has difficulty to get approved from central government. Also Yang’s contract with FEV to develop oil-gas-electricity hybrid has come to an end. any one who can confirm on these?
http://www.tradingmarkets.com/news/stock-alert/ahujf_anhui-jianghuai-to-set-up-venture-with-hybrid-kinetic-motors-1155513.html
Alfred, the above latest link mentioned nothing about JV fell through. Care to let us have detail on your latest report?
As far as FEV contract is concerned, it may be rumours only. If the case is liked that, HKMC will be in deep trouble. What else can Yang Rong sell to the potential investors?