Proton is expected to announce a non-exclusive alliance with a Chinese firm this week. At one point, Proton’s board had thought about an exclusive partnership with one firm, but Datuk Azlan Hashim told reports that Proton’s board had re-thought the situation and consluded it was better to have several strategic partners in multiple areas like products, components, market access and other activities. Are we looking at a “don’t put all your eggs in one basket” philosophy being put into effect here? The partnership is expected to be finalised in April.
Previously there were rumours on tie-ups between Proton and Chery, as well as Proton and Jinhua Young Man related to car assembly in China. There were not much follow-up on the Chery rumour, however StarBiz reports today that Proton would be selling CKD kits of cars like the Proton GEN-2 to Jinhua QingNian. I think it’s safe to assume Jinhua QingNian is Jinhua Young Man as they are both from ZheJiang.
It is hoped that this partnership will boost Proton’s economies of scale. Jinhua QingNian currently builds luxury coaches and trucks, and hopes to enter the passanger car market with Proton’s CKD kits. The cars will be marketed under Jinhua’s own brand and logo in China. If all goes well and the CKD kits have good sales in the China market, it will definitely improve Proton’s profitability as economies of scale improves and cost per part goes down. Good move, Proton.
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Very good step proton..
before they pirating us.. give them license, and got paid.. better than ..
China is really really really really big market..
sooner = we will got no more 'no quality' parts from malaysian part vendors .. (outsource to chine = cheap) .
sparepart jadi murah! .. campro engine mass production? in china too? cheap labour cost… bla bla bla.. but please.. the basher, dont be blind bash.. :p
No matter how.. it's still a very good move.
beli saham proton hari ini.. esok dan lusa naik .. lepas tu jual!.
Refer to "non-exclusive alliance" – thing shall be happen in "opposite way", Proton products range is limited to small passenger cars. If oversea market like UK as an indication, the products on offer by Proton are basically limited to 3 models: Gen-2, Impian (Waja) and Savvy. Therefore, how Proton want to enter into exlusive alliance with just limited yet inferior products to offer? Chery, Jinghua Young Man and Jinhua QingNian may be new player in export market but they are "big boys" in China in which they enter into someform of strategic partnership with world class players. Proton with "xenophobia and patriotic" mentality want to enter into partnership with world class player yet expected the other party to be "junior partner" as previously shown, lead to many failed negotiation for such alliance. Then it is fair to say as in previous and China case, it is strongly indicate thing should happen in the opposite direction! That is other parties are not interested to enter into exclusive alliance with Proton!
Refer to "several strategic partners in multiple areas like products, components, market access and other activities" – this is another typical "official statement" from Proton.
Do Proton adopt “don’t put all your eggs in one basket†philosophy? In this case, it is more appropriate to say Proton try to "put one egg in many baskets". Proton limited products range, try but failed in many attempt to enter into someform of "alliance/partnership" with so many automotive related companies including motorcycle company from Italy, but at the end it is either failed or losing money! Most of previous failed attempts also mostly with those in financially trouble automotive companies! WTF, this is not bashing but are facts! "the truth is out there", it true, is true, …………..
doesn't matter how many companies it tie up, as long as their mind set is not change it will fail!!
why you still want to support this bloodsucking killing malaysian company, Proton is a major turn off for Malaysian…just imagine you are in a group of discussion with italian, german, english,american , korean and japanese would you able to cope with discussion on motoring as you need to talk about Proton.
20 years is long time enough for bullying wake up Malaysian,
PROTON is not a car manufacturer they just selling able to move joint metal at the price of a our dignity…very well expensive please dont make yourself suffer in Proton metal box not 5 years not 9 years….
Whatever partnership or "exclusive alliance" Proton looking for in order to sustain it survival. In Proton case, unfortunately its calamity is not limited to looking for partner, but “born handicap†by economically not viable since its inception.
Therefore, current NAP and automotive tax-phobia structure to sustain Proton or treating consumers as “cash cow†to buy its over-price products in order to make it profitable and maintain its contentious existence is “unpleasant encounteredâ€.
There are ten (10) main reasons why Proton long-term viabilities are uncertain and may lead to its disgrace demise: –
1. Maintaining current “xenophobia†ownership structure, armed with political-economic-patriotism connection of parochial automotive policy and predatory tax-phobia regime preying on captive but defenseless consumers.
2. Don’t have strong branding and suffering image on perceived inferior products. This creating opportunity for criticism and obvious subject for lampooning in the market.
3. In car making game, apart from quality, quantity also plays big part. Proton output is “fractions†compare to world-class players. Thus unable to achieve economy of scale.
4. Unable to be competitive in term of pricing due to factor mentioned in item (3).
5. Anecdotally, Proton lack of R & D and innovation resulted in there are no truthfully new cars develop to meet latest trend and generate consumers interest. Its lineup limited to assemble products by “modificationsâ€, “crossbreedingâ€, “restylingâ€, “re-badgeâ€, etc. Presently adopt “replacement†instead of improvement for TRM, SRM and PRM!
6. Proton “great romantic demeanor†with crass automotive policy and tax-phobia structure, which become its “money-making business†tool, expected government to act as “sugar daddy†by maintaining it. As a result, car buyers are “force†to act like “sugar mummy†to buy it “over price†but inferior products to sustain its hullabaloo existence.
7. Its spanking new facility at Proton City, Tanjong Malim is motivated by political decision to be located there to spur economy activities. In term of human resources, “on average the surrounding population education level is secondary school onlyâ€.
8. Geographical distribution of Proton’s products is limited to Malaysia only. In term of export market, Proton market share is “pathetic†even in UK. Present success on oversea markets is too insignificant for long-term sustainable growth.
9. Economically, Proton does not viable since its inception, but is a liability to the nation! After 2 decades, apart from setup cost, Proton inflicted huge economic cost in term of “RM Billions†annually and diluted the consumers’ Purchasing Power Parity (PPP).
10. Proton’s fears of market forces and ignores equally its own “life-threatening illnesses†need holistic diagnosis to prepare for long-term growth or become world-class player!
Its true, is true, ……… This is just "tips of the iceberg" on the Proton sad state,……..
Somehow, I'm beginning to feel more skeptical towards every move that Proton make or plan to make. Everybody got a point(s). And most of the time they speak the truth. Maybe in months to come I might take the couldn't-be-bother or couldn't-care-less kind of attitude towards Proton. I'm just tired of their shi*. But regardless of whatever hatred that I have towards them, I still want them to success. Am I just a blind nationalist or just a concern citizen?
ANOTHER NEWS HEADLINE ON PROTON ATTEMPT TO FORGE PARTNERSHIP OR EXCLUSIVE ALLIANCE? Same old story!
Looking at the current way Proton operating at Malaysian automotive sector, it has been said that the most convenient way to outdo competitors in this dog-eat-dog car market is to adopt archaic "Machiavellian Approach" back by political forces, that is always mutually exclusive with the reality of market forces. Until today, the local car market has been obsess by such illusive and controversial topics as national car status and the environment at which it is operating, albeit protective market currently governed by National Automotive Policy (NAP). “The government announced its National Automotive Policy Framework aimed at making Malaysia a regional hub for the manufacturing, assembly and distribution of automotive vehicles and to promote a competitive and viable automotive sector in the country, in particular national car manufacturers (Bernama, 20 Oct 05).â€
Whilst NAP objectives are lauded, its framework is more incline toward the manufacturers-led growth with preference to Proton. Unfortunately, this policy may not redress adequately the most fundamental globalize free economy mechanism, that is the success of any free enterprises is not depend on government intervention, but response to market-driven forces. In other word, NAP is a glaring contradiction of AFTA spirit and “farce†as far as dealing with market-driven forces is concern, which is to meet the consumer’s demand in terms of good quality and value for money products. The missing element in NAP framework is basically it does not address the market forces, but politically motivated design to please certain inner-circle “power forces†in this Malaysian passive political landscape.
Proton over the years has creates thousands of jobs, technical tie-up with Lotus Group from UK, developed engineering skills and technical know-how. But one gracelessly fact persists is most of the local auto parts vendors and components makers are not up to mark, but steadfastly supported by Proton does not work to its own advantage in respect of product quality and competitive pricing. Thus, it is not surprising to see why Proton who is still disciple of the austere “Machiavellian Approach†by either ignores its own problems or fuel it with a short-sighted automotive policy, could result in the current irreversible falling fortune and may lead to untimely demise.
However, as we approach new millennium and globalization of trades through WTO, FT Agreements, trade liberalization, etc., the environment have change and so Proton shall transform the mindset with which approach such elusive topics as asking for government intervention to protect its home turf. This tragedy is, however suffered in conceited by the consumers. Underneath this practice is shroud of misery, as consumers are treated like “captive market†by contemplated them to pay exorbitant prices not only for imported cars (combine taxes up to 300%), but the so call national car is also sell at relatively high price with perceive inferior quality. There are too many complaints and negative remarks on the quality and consumers’ perception of Proton cars can be best described as “3rd mass mediocre class products with 1st princely class priceâ€.
There is no argument on the current NAP objectives at providing some leverage for Proton to compete in domestic market. Unfortunately, this is done at the expanse of consumer interest to get good quality and “value for money†products! Proton product does not achieve economy of scale! It is as to the notion that Proton is an “immortalize sacred cow†which needed to be defense at all cost, including use consumers as “milking cowâ€! How long the consumers have to endure this calamity? Another 20 years?
Proton currently facing falling market share and can’t compete in this ever-changing home turf non-excuse environment pending the advent of AFTA. Instead of former Prince CEO acknowledged its own problems, it is just creating ruckus by embroiled on the issue of, and antagonism toward Approved Permit (AP) for imported cars. This is an enmity attempt to portray AP as the causes of Proton calamity. Actually, the contentious issue is the manner on the issuance of AP by MITI, which benefits certain individual. AP mainly for imported of so calls tune-up chassis for luxury cars categories like Toyota’s Wish, Wald or Mercedes-Benz’s Kleemann or Brabus. To a certain extent, AP also used to import other, especially Korean make cars that may pose competition. Nevertheless, Proton should put up a brave face to take up this challenge.
But basically both Proton’s products and AP for importing luxury cars are cater to difference market segment. There is no relationship between AP issue and Proton poor performance in the domestic market! This issue is resolve by make changes to the manner pertaining to the issuance of AP. With the ungraceful departure of former egoistic Prince CEO, present management team has an uphill task to reverse the fortune of Proton. Proton current predicament lead to its very continue existence is at stake as far as it is still operate at current mode, some form of tie up with foreigner is inevitable!
The ambiguity surrounding the national cars to be competitive has been in large part responsible for the failure of past attempts by government to liberalize our local car market. This denied the consumers to enjoy better products at fair price in line with AFTA. Then what are the real benefits of Proton label as national car project to the peoples? The answer to this is very straightforward, Proton benefits tremendously from current archaic “Machiavellian Approach†automotive policy, but consumers have to suffer, and will continue to pay for high price for import makes and mediocre Proton products in the foreseeable future.
It is time to pursue radical steps to shape up the Proton, failure to do so it shall ship out! This archaic “Machiavellian Approach†NAP framework shall be discards for the sake of the automotive sector long-term growth as well as the consumer’s welfare. The government has social obligation to protect the people interest by devise “new remedies†not only to protect Proton, but shall benefit the consumers at large. Automotive policy shall not govern by current malevolent tax-phobia regime that among other leading to prohibitive pricing for local and import cars, which are very superficial as the consumers are penalize to feel the chill of high prices for almost 2 decades, that is far too long! For how long the consumers still have to endure this agony?
All extemporaneous rules and regulations not associated specifically with the perfection of “trades liberalization and fair price†shall be expunges from the policy equation in order to revitalize the car industry. Current unnecessary trades barriers not in the interest of consumers shall be repudiate and rebut any attempt by Proton lobbying for preferences. This is to enable the consumers have access to widest cars products at lowest price without any artificial restrictions, just like electronics and electrical appliances sectors. It is time the state shall play “God figure†in order to secure the desire outcome for consumers’ interest.
Machiavellian Approach asserts, "One successfully governs by force and not by law." In this context, present external force like predatory nature of the international market (“survival of the fittestâ€), uncertain world economy outlook, globalization, volatile oil prices, receptive to diseases pandemics and terrorism do carry much, if any, weight for company survival. Current days of stubbornly clinging on such archaic “Machiavellian Approach†tax-phobia regime to “force†the consumers to buy national cars are unwanted element in automotive policy. Ultimately, the catalyst for change by Proton is to redress their own problems by responses to free market-driven force. Any expectation by Proton to treat local consumers like its own fiefdom to support its existence and cover its weaknesses is uncalled for, as previously requested by its former Prince CEO that demonstrated a remarkably characteristic display of egocentric acts.
The effectiveness of the NAP to spurn automotive sector growth as a whole is pragmatic, but to redress Proton predicament at the expanse of consumers is very ambiguous. This "NAP over-protection by the state" not only plays right into the Proton's hand, but it will inflict painfully on car buyers by act as “money-grabbing machine that mercilessly milking defenseless consumers at largeâ€. The government have social obligation and prudent in its conduct of formulating any policy by putting people interest first. It should be remembered above all the democratically elected government should bear in mind that its policy is not necessary to be popular, but at least “better to be loved than hated.â€
Outwardly, on the export market front, this shall be the Proton litmus test for potential long-term growth and real challenges to acquire national pride and dignity. However, there is persistent poor quality and high cost resulted in it unable to compete in level playing field in mature market like UK or US. Currently, Proton as government-linked company (GLC) operating in a solace close market with manipulation of pricing resulted in unfavorable high prices for its competitors for all type of imported makes. If Proton is to operate at open market, then it is not economical viable even from the start!
aksMs said,
Am I just a blind nationalist or just a concern citizen?
You are a "blind nationalist" but really a concern citizen!
Just to add further akMs is a "blind nationalist" as far as Proton is concern!
Wow..you guys are great! I'll vote for you to become the CONSULTANT for Proton!!
unbelievable..this is the longest 'comment' i have ever seen in paul's blog…*chuckle* Thanks for sharing..
hi joe, thanks for the detailed analysis of proton. interesting reading.
another truth you didnt mention is, the government will never close proton. thats a fact. so we will all have to live with proton.
what then do you think, would be the best strategy for proton today to turn the company around? and what should the government be doing at the same time since they started this mess and i'm sure, equally to blame for it.
Sadly, Proton was conceived with a social obligation in mind. It was great idea at first but numerous costly mistakes was done along the way. They would never closed it down as mentioned by honda_driver as so many people depends on it, i.e the workforce and the vendors. The people there still lacks passion to build good quality and great looking cars. Besides that, the ratio of people working there is not correct but this is very sensitive to comment.
Anyway, I do wish Proton all the best. BTW, great comments from Joe Ooi.
joo ooi,
NAP do not govern anything yet nor does it been published, its still under scrutiny, last one to look at it Mayban Security. It only exist on paper, thats why other auto company do not make any move into or out of M'sian market. Its not been adopted.. so how can the auto sector been govern by NAP?
Partnership & Alliances is needed but on how Proton place itself in the situation is something that Proton need to look into -agreed.
The other fact that I like to refute is on the historical site. The Saga is given free by Mitsu – no R&D or whatever needed. Some of the machines and molds are even donated by the Jap govt. through various agencies. Thus it can be profitable if it continue to operate at that level (as subsidiary to Mitsu).
Globalization is not of the best interest even to the consumer. It only serve as a method by big corporations to expand their market. May be u can also read the anti globalisation piece on top of Machiavellian Approach & AFTA that you keep on quoting.
Tracks,
I met many Proton workers from engineers-operators; and yes they have passion about cars. Sadly to turn passion into reality need effort… this is whats lacking from them.
Wish I can comment further, but as I'm no literary genius and I do not have the time to write more but I do wish that someone with this writing skill do a proper analysis before making this sort of comment.
honda_driver said to Joe Ooi: –
"another truth you didnt mention is, the government will never close proton. thats a fact. so we will all have to live with proton."
"what then do you think, would be the best strategy for proton today to turn the company around? and what should the government be doing at the same time since they started this mess and i’m sure, equally to blame for it."
ANSWERS:
It is not necessary truth, look at UK's MG Rover case, more than 100 years history, still close! What a big deal, any private enterprise losing money in free market, company law allow for closing down.
There is no best strategy for Proton to turn around. We are not talking about the WORLD BEST like say Mecerdes-Benz produce the best luxury car. We are talking about the worst and "smelly mess" to be clean up. I mean what is the least cost to clear this mess, not burden tax payer money and do away with current automotive tax-phobia structure which suck the car buyers' blood until last drop!
Thefore, the most economical way to clear the "smelly mess" created by Proton with least cost (with exception of item 5) to consumers and tax payers may shown as below: –
1. Foreign tie-up and active participation in term of share holding – might lose its national identity. But that is the reality of market and will lead Proton out of illusion. Good news is become multi-national company.
2. Become biggest contract assembler in South East Asia by virtue of its spanking Tanjong Malim plant capacity that currently under utilize.
3. Since Proton is experience and hand-on in aspect of modification, restyling, re-badge, etc. Naturally, just like Boon Koon Group, involve in rebuilt, refurbish or re-conditions on used commercial vehicles. Proton may venture into refurbish business or tune-up chassis especially luxury cars like Mercedes-Benz, BMW or Lexus.
4. Become component maker like BSA International Bhd producing high quality alloy wheel, or become trading house for car accessories like Won Woo Trading.
5. Let “foreigner salvage it asset and left its liability to tax payersâ€!
6. Can be one or a combination of the above but item 1 is the best scenario.
as far as i'm conceened, by supplying the parts to various companies equal bigger profit margin..if the chinese want to put their logo on proton's part, it is much better,, any problem related to the parts will not affect proton credibility..
the "partnership" is basically supplying parts.. technology wise, i do not think so.. just hope it will no be a "partnerSH*t" like VW did to proton
Biggie: NAP do not govern anything yet nor does it been published, its still under scrutiny, last one to look at it Mayban Security. It only exists on paper, that’s why other auto company does not make any move into or out of M’sian market. Its not been adopted. So how can the auto sector been govern by NAP?
Joe Ooi: NAP framework is out end of last year but not the detail part!
Partnership & Alliances is needed but on how Proton places itself in the situation is something that Proton need to look into -agreed.
Joe Ooi: Noted
The other fact that I like to refute is on the historical site. The Saga is given free by Mitsu – no R&D or whatever needed. Some of the machines and molds are even donated by the Jap govt. through various agencies. Thus it can be profitable if it continue to operate at that level (as subsidiary to Mitsu).
Joe Ooi: There is agreement on technical collaboration between Proton and Mitsubishi in 1980s. There is no such thing as Saga is given free, but Proton has to pay royalty! Japanese government through various agencies only provides aid and extend charity project to poor nations. They never donate machines and moulds to Proton to carry out profit motivated project. Where do you get this info, I am sure you can't reveal it except come out from your mouth! Even Proton Holding Bhd annual report never included this item, you can check their website. If you ask Proton (if they want to entertain you) then they are most likely clarify that they purchase all mould and machines. To say that they can profitable to operate at this level is clearly shown your lack of understanding! Are you meaning Saga model have to be on market for another 100 years? Proof me wrong! Ha, ha, ……
Biggies Globalization is not of the best interest even to the consumer. It only serves as a method by big corporations to expand their market. May be u can also read the anti globalization piece on top of Machiavellian Approach & AFTA that you keep on quoting.
Joe Ooi: Agreed with you that globalization would not do dam good on every aspect to everybody. I do not only read anti globalization piece but more than that. However, I can't give further comment, as I am not an economist, just a layman. May I suggest you read on the greatest economist thinkers like John Maynard Keynes (1883 – 1946) with Keynesian Approach, Adam Smith (1723 – 1790) on “The Wealth of Nations†(1776), Karl Marx (1818 – 1883) on "Capitol I & II" and history on Renaissance Period (1450 – 1600) with specific reference to Niccolo Machiavelli (1469 – 1527) on "Machiavellian Approach". Perhaps you will have in-depth understanding on why free trade (Capitalist) triumph over Socialist (Communist/Marxist) and of course the ugly side of Free Trades. Remember Machivellian Approach make it more dirty and ugliest -either free trade or communist system.
Biggie: I met many Proton workers from engineers-operators; and yes they have passion about cars. Sadly to turn passion into reality need effort… this is what’s lacking from them.
Joe Ooi – Proton lacking is not limited in this aspect, they are lack in almost everything. Worst need consumers "subsidy" and government protection to sustain its existence. It is dam liability to tax payers and government who create it in the first place.
Biggie: Wish I could comment further, but as I’m no literary genius and I do not have the time to write more but I do wish that someone with this writing skill did a proper analysis before making this sort of comment.
Joe Ooi: Do a proper analysis – I am in the opinion it is you who should do proper analysis before expecting other. You already admit you are not literary genius and do not have time to write more but wish other do something you do not do anything! Are you trying playing "god figure"? How do you know me do not do proper analysis before make this sort of statement! You shall demand for clarification from me on this matter in the first before you make this wild accusation and unsubstantiated statement! If say I can proof I make proper analysis with facts and figures support by case study! Then how! Why you are so "generous and kind" by what the law perspective term it as "take the burden of proof" from me by come out with unsubstantiated statement! Ha, ha, he, he, …….. If this is the case, "then I want to eat more rice and you wash more plates"? Can you, proof me wrong,……….
hi joe, i especially thought your answer number 2 was a very good one. the facility already exists. why not use it.
just some observations of my own.. on comparisons with rover and proton, the main difference i think is, proton is more than a car company to the govt. besides that, proton is owned by the govt unlike rover. the govt used proton as a spring board to industrialisation and manufacturing, helping to build up the smi and sme guys, as well as to provide jobs. same with tanjung malim, as you mentioned. its part of the govt's strategy i believe, to try and grow those areas, same with KLIA…etc.
thats why i believe proton is here to stay.
Proton, as well as other heavy industry like Perwaja at Kemaman, Trengganu is conceived as a master plan in the 1980s to achieve industrialization of the country. However, this method of using heavy industry for country progress to developed status is "outdated". Therefore, our former PM come out with MSC encompassing KLIA, Putrajaya, Cyberjaya and KLCC in the hope to drive this country to information age known as K-economy. The sad truth are all these endeavors become "white elephants" as the main ingredient is missing – human resources expertise with strong R & D and innovation.
big stupid "white elephants"