Zhejiang Geely Holdings Group that inked a definitive agreement under which it acquired a 49.9% stake in Malaysia’s national car manufacturer for RM460.3 million – a peanut amount indeed – is facing growing pains at Proton.
Sources revealed the Chinese automaker is now feeling the difficulties of being a minority partner – since the 49.9% does not make it a majority partner – in the Malaysian company.
The source told TISG Geely is on the brink of rescinding on the deal if it does not gets its way in running the affairs at Proton, a company that has the reputation of ‘offending’ its foreign counterparts.
The source said Geely is now facing the full brunt of crony capitalism – not that it is not a crony corporation from China – but the Proton’s edition of crony capitalism is deeply entrenched.
To the point that the Chinese corporate leaders are having a nightmarish time decoding and understanding the way Proton functions.
Given the fact that Geely is practically giving away its Boyue sports utility vehicle (SUV) platform to Proton for a meager RM290 million, it is apparent that it will not have full control of the operations.
Vamos Geely or Kaput
Most analysts say Geely will need two years to see a Proton turn around, this if things go well after it acquires the brand.
And things are not going well to the point that the government of PM Najib Razak allegedly ordered Proton to stifle the matter before it goes public.
It is said Geely is facing the same issues that Volkswagen, the troubled German brand experienced at Proton.
Volkswagen did make a pass at Proton in the past, attempting to acquire a majority stake in the local company, but the bid failed after the Germans discovered how crony capitalism works.
It apparently offended the Germans so badly that they pulled out of talks and moved away from the Proton car maker in a subtle manner.
Reportedly, the culture of having tea at 10 am in the morning, lunch at 12.30 which is then followed by prayer times for the workforce and a check-out time that is no better than the bloated civil service workforce in Malaysia, forced the Germans to call it ‘Kaput’.
Those incidents took place at a time when Tun Mahathir Mohamad – the genius behind the brand – was on a long leave of absence, attempting to end the wars in Gaza and criminalising wars across the globe.
Mahathir then returned to Proton for a brief period, getting it moving again, but since the elderly statesman became an opponent to Najib, it appeared that Proton’s fate also took a dip.
And this is how crony capitalism can be contagious.