Nanjing MG get out the begging bowl
Nanjing Automobile (Group) Corporation has asked the National Peoples Congress (NPC) to support its car business, fueling rumors the company is in difficulty.
Company president Wang Haoliang has submitted a proposal to the NPC, seeking government support for a loan of two billion to three billion yuan (about 260 million to 390 million U.S. dollars), says Fridays Shanghai Securities News.
The partner of Italian carmaker Fiat said in January that it would build cars under the acquired British brand MG from March 27.
The company plans to build an annual production capacity of 200,000 MG vehicles, 250,000 engines and 100,000 gearboxes in Nanjing with a total investment of 3.5 billion yuan in the next five years.
The ambitious plan, however, was supported only by the Import and Export Bank of China, which has offered a loan of 500 million yuan (about 65 million U.S. dollars).
Banks apparently lost confidence in the company because several of its subsidiaries are in the red, the newspaper quoted an industry insider as saying.
Its not all bad news however, we think Nanjing MG went directly to the government for financial aid because Chinese banks are a little wary of handing out loans to big companies due to the sheer number of bad loans that Chinese banks have given out to ailing companies over the past few years.