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Nissan-Honda merger talks fail: A look at what went wrong

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Late last year, Nissan offered embattled rival Honda a lifeline: a $60 billion tie-up that would have helped both Japanese carmakers compete against Chinese brands disrupting the auto industry.

Years of sales declines and management turmoil had left Nissan a weakened force, especially after it underestimated demand for hybrid vehicles in the US, its biggest market.

But merger talks broke down in little more than a month because of Nissan’s pride and lack of concern about its situation, as well as Honda’s sudden decision to revise the terms and propose that Nissan become a subsidiary, six people familiar with the matter told Reuters.

Nissan, Japan’s second-largest carmaker after Toyota until 2020, insisted on being treated almost as an equal in the talks despite its weak position, three of these people said.

Honda has pressed Nissan to make deeper cuts to its workforce and factory capacity, but Nissan is unwilling to consider politically sensitive factory closures, the three sources said. They said they were under the impression that Nissan thought it could recover on its own despite its mounting difficulties.

This intransigence, coupled with Honda management’s perception that Nissan was slow to make decisions, led to the undermining of a deal that would have created one of the world’s largest carmakers, the three people said.

Famed carmaker Nissan is now also facing the threat of US tariffs on vehicles made in Mexico, which accounts for more than a quarter of US sales. Both Nissan and Honda will announce their earnings on Thursday.

‘I think it’s a management problem,’ Julie Boote, an analyst at research firm Pelham Smithers Associates, said of the turmoil at Nissan. ‘They are completely overestimating their position, their brand value and their ability to turn the business around.’

Nissan and Honda declined to comment on specific aspects of the talks described by Reuters sources.

Nissan CEO Makoto Uchida visited his counterpart Toshihiro Mibe last week, saying he wanted to end talks after Honda made its subsidiary offer.

Both carmakers said they would provide an update this month.

Merger talks process

Nissan stunned investors in November by slashing its profit forecast by 70 percent due to deteriorating sales in China and the US. The company announced a turnaround plan that included cutting 9,000 jobs and reducing global capacity by a fifth, but some analysts called it ‘too little, too late’.

In December, Nissan and Honda announced plans to merge as a result of talks they have been in since March 2024, when they said they wanted to collaborate on technology.

But the merger talks quickly hit a wall over the calculation of the shareholding ratio for the combined company, two people said.

One of these people said Nissan CEO Uchida privately expressed scepticism about the future of the deal. Honda executives complained that Nissan’s decision-making process was too slow, four people said. A public update on the talks was originally set for the end of January, but was postponed until mid-February.

Honda executives thought Nissan’s turnaround strategy lacked detail and were disappointed to see a meagre reduction in factory capacity, the two sources said.

Reuters was unable to ascertain whether Honda had requested a specific number of layoffs or identified specific factories for capacity reduction.

One person said Nissan did not want to close factories because it would cause their value on paper to fall and hurt earnings.

The layoffs promised as part of Nissan’s turnaround plan amount to 7% of its global workforce. Honda has laid off more people in China in the past two years, one person said.

A person familiar with Nissan’s thinking said Honda seemed unwilling to compromise on its plans, implying that it did not see Nissan as an equal.

New partners

It is unclear what could bring the carmakers back to the table. They are likely to return to their initial agreement to work together on technology, the three people said.

If both companies agree to end talks, neither would be liable for the 100 billion yen ($650 million) break-up fee under the December memorandum of understanding.

Nissan is open to working with new partners, including Foxconn, the Taiwanese contract manufacturer that makes Apple’s iPhones, Reuters reported. Foxconn did not respond to a request for comment.

Foxconn Chairman Young Liu said on Wednesday that their aim was to co-operate with Nissan, not buy it.

The Taiwanese company’s electric vehicle business is led by former Nissan executive Jun Seki, who at one point was seen by an insider as a candidate to become the carmaker’s CEO.

Foxconn would be a more generous suitor than Honda because it needs a brand name in the auto industry and Nissan could be attractive, said Amir Anvarzadeh, strategist at Japanese equity advisory firm Asymmetric Advisors.

‘Whatever you think of their cars and balance sheet, at least the brand is still quite recognisable,’ Anvarzadeh said of Nissan.

The Japanese government has so far given little indication of how it views the breakdown of talks between Honda and Nissan or whether it would favour a Nissan acquisition by Foxconn, which is also the largest shareholder in consumer electronics company Sharp Corp.

Boote said the real question for Nissan now is what management will do.

‘They don’t have a realistic view of what’s going on in the auto industry and what really needs to happen at Nissan,’ he said.

ASIA

Taliban denies Pakistan claims Jaffar Express “terrorists” were in contact with leaders in Afghanistan

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The recent attack on the Jafar Express passenger train in the Pakistani province of Balochistan by the Balochistan Liberation Army (BLA) has sparked a number of reactions, including strong condemnation from the National Resistance Front and some Afghan jihadi organizations. Many people asked for designation of the BLA as a terrorist group.

Pakistan Foreign Ministry spokesman Shafqat Ali Khan said that “India has been involved in terrorism. In the particular attack on Jaffar Express, the terrorists had been in contact with their handlers and ring leaders in Afghanistan.” The statement came a day after the rescue operation for the Jaffar Express attack was completed and all the 33 BLA fighters, who hijacked the Jaffar Express which was carrying over 400 passengers, were killed.

The Pakistani military said that 21 passengers have been killed and the remaining hostages have been freed. And also, four Pakistani security forces killed during the rescue operation in the Mushqaf area of the Bolan district.

Shafqat Ali Khan added that “the terrorists have safe havens in Afghanistan, and Pakistan has repeatedly urged the Afghan interim government to prevent groups like the BLA from using its soil for terrorism.”

Pakistani Director General Inter-Services Public Relations Lieutenant General Ahmed Sharif Chaudhry said that the Jaffar Express incident changed the rules of the game.

“Whoever did this will be hunted down and brought to justice,” he said, adding that the terrorists had nothing to do with Islam, Pakistan and Balochistan. In a statement, the ISPR said that intelligence reports have unequivocally confirmed that the attack was orchestrated and directed by terrorist ring leaders operating from Afghanistan, who were in direct communication with the terrorists throughout the incident.

Taliban urges Pakistan to restrain from irresponsible statement rather resolve their own security issues.

The Taliban Foreign Ministry Spokesman, Abdul Qahar Balki asked Pakistan to refrain from giving irresponsible remarks and instead focus on the security situation and internal issues of the country.

“We categorically reject baseless allegations by a Pakistani army spokesman linking the attack on a passenger train in Balochistan province with Afghanistan, and urge the Pakistani side to focus on resolving their own security and internal problems instead of such irresponsible remarks,” Balkhi added.

Balkhi furthered that “no members of Balouch opposition have presence in Afghanistan, nor have they ever had or have any links with the Islamic Emirate.”

He expressed his saddened by the loss of life of innocents in the incident, lamenting that “sacrificing civilians for political objectives is unjustifiable”.

Baloch struggle against injustices.

The incident came despite the fact that the Baloch struggle against injustices by the Pakistani military began in 1948. These struggles are in response to systematic discrimination, political marginalization, the “kill and dump” policy, and the unjust exploitation of Balochistan’s natural resources.

Given these facts, a fundamental question arises: What is the difference between the oppression of the Pakistani military against the Baloch and the oppression of the same military’s proxy forces in the form of the Taliban against the people of Afghanistan?

“What difference should there be between the BLA and those who have condemned it, to call one a terrorist group and consider themselves legitimate fighters, while both groups have resorted to armed resistance in response to injustice and oppression,” Rahmatullah Nabil former Afghan spy head said.

It seems that condemning the Baloch freedom movement indicates a double policy that can add to the distrust of the narrative of the struggle of these movements. “I think it is essential to address such issues by paying attention to the historical and social roots of the conflicts and responding to them with a fair and impartial approach.”

 

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Premier Li calls for accelerated efforts to meet China’s economic goals

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Chinese Premier Li Qiang has urged officials to do their utmost in the race to achieve key targets, such as maintaining an economic growth rate of around 5%, as set out in the “two sessions” held last week.

“We must improve measures and accelerate their implementation, race against time amidst various uncertainties, and work quickly and proactively,” Li said on Wednesday at a State Council meeting, one day after the conclusion of the annual meetings of China’s top legislative and advisory bodies.

As Beijing outlined a series of policies to boost growth in the face of economic headwinds, Li called on all state institutions to “take the initiative to fulfill their responsibilities and take more positive steps to complete their tasks.”

Although Chinese leaders emphasized their confidence in the future of the world’s second-largest economy, they also highlighted ongoing challenges such as weak domestic demand and intensifying trade frictions with the US during the two sessions.

According to a summary of Wednesday’s meeting reported by Xinhua, Li asked officials to “closely monitor changes in the situation and make good policy preparations to ensure they can be launched in a timely manner and deliver results as soon as possible.”

In his work report last week, Li emphasized that China’s growth target of around 5% for 2025 underscored the leadership’s determination to tackle challenges and achieve results.

While China announced further fiscal stimulus measures during the two sessions, following a package in the last quarter of 2024, it faces uncertainties not only domestically but also externally, particularly due to the trade war with US President Donald Trump.

At Wednesday’s State Council meeting, a work plan was discussed and adopted that clarified the division of key tasks for this year among different departments and emphasized inter-departmental coordination.

According to a separate meeting held by the Ministry of Industry and Information Technology on the same day, these tasks include expanding the scale of 5G telecom technology applications and accelerating the development of 6G.

Li Lecheng, the Party Secretary of the Ministry, pledged to continue efforts to upgrade traditional industries, accelerate the digitalization and green transformation of the manufacturing sector, and accelerate the application of artificial intelligence, especially in areas such as electric vehicles, the low-altitude economy, and biomanufacturing.

According to data from the Ministry of Commerce, 1.664 million electric bicycles were sold and replaced nationwide from January 1 to Tuesday, accounting for 120.4% of the total number in 2024.

Meanwhile, the Industrial and Commercial Bank of China, a leading state-owned bank, pledged on Wednesday to provide at least 6 trillion yuan (829.2 billion US dollars) in financing to private enterprises over the next three years, Xinhua reported.

Bank Chairman Liao Lin said at an event in Beijing that the aim was to “support businesses to stick to their core businesses” and “help the economy continue to recover and improve.”

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Zhao Leji misses key political meetings, citing respiratory infection

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For the first time in recent history, the head of China’s top legislature was absent from the closing of the parliamentary meeting known as the “two sessions” on Tuesday.

Zhao Leji, 68, the third-ranking official and chairman of the National People’s Congress (NPC), was unable to attend due to a “respiratory infection,” according to his deputy, Li Hongzhong, who presided over the closing ceremony.

Zhao last appeared in public on Saturday at the first meeting of the NPC presidium.

For the first time in decades, not all members of the Politburo Standing Committee attended the closing meeting of the NPC.

However, Zhao’s name was mentioned when Li announced the voting results of the NPC’s annual work report.

“The deputies of the NPC listened to and reviewed the work report presented by Chairman Zhao Leji on behalf of the Standing Committee of the National People’s Congress. The session fully approved the work of the Standing Committee over the past year, agreed with the tasks proposed in the report for the coming year, and decided to approve the report,” Li said.

According to Li, the work report was approved by an overwhelming majority.

Chinese President Xi Jinping and Premier Li Qiang both appeared relieved as they left the stage after the ceremony concluded.

For the first time since the pandemic, Covid-19 tests were not required to attend the two sessions.

Zhao was also absent from the closing of the annual session of the Chinese People’s Political Consultative Conference (CPPCC) on Monday, which was attended by the other six members of the Politburo Standing Committee, including President Xi.

Since the 1980s, it has become a political norm for all top leaders of the ruling party to attend the opening and closing ceremonies of the annual NPC and CPPCC sessions as a political endorsement of the national legislative and political advisory sessions.

The annual event also serves as a platform for party and government leaders to hear the views of non-party Chinese elites on China’s most pressing issues.

In addition to missing the closing of the CPPCC, Zhao also did not attend two meetings of the NPC’s presidium on Monday, which are usually overseen by the NPC chairman. Instead, state news agency Xinhua said that NPC Vice Chairman Li Hongzhong was “entrusted by Zhao Leji” to preside over the two meetings.

At the meeting where Zhao last appeared in public on March 8 at the NPC presidium, it was decided to submit the draft decision on the amendment of the Deputies Law and the draft revisions to the government work report and the central and local government budgets to the NPC for consideration.

Zhao, who was promoted to the Politburo Standing Committee in 2017, served as secretary of the Central Commission for Discipline Inspection, the party’s top anti-corruption and political discipline body, until 2022, succeeding Wang Qishan.

At the 20th Party Congress in 2022, he was reappointed to the Politburo Standing Committee, becoming the third-ranking member. In March 2023, he was appointed chairman of the NPC Standing Committee, succeeding Li Zhanshu.

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