[EDITORIALS]Daewoo-GM near the finishAfter long negotiations, creditors of Daewoo Motor Co. are set to sign a final agreement with General Motors Corp. to sell the bankrupt Korean carmaker to the U.S. firm. The deal, if completed, clears one of the most burdensome uncertainties in the Korean economy. We can expect it to raise Korea's international credibility and contribute to its economic recovery.
At this point, we will not take issue with selling Daewoo at a bargain price. Of course, it is controversial that only $400 million of the price tag of $1.2 billion will come from General Motors' pockets. In addition, local creditors will provide the U.S. carmaker with $2 billion of financial support and the Korean government offered tax breaks. But considering Daewoo's inability to survive independently and the possible impact of a broken deal on the national economy, we believe that there is no other option but to sell Daewoo to General Motors.
There are lessons to learn. Daewoo is a typical example of the rise and fall of a Korean company, and it cost the country an arm and a leg to clean its bankruptcy. In particular, the government and Daewoo's lenders should reflect upon themselves. They showed a lot of unguarded points during the course of the negotiations.
The latest agreement is just the beginning of a grueling task to normalize Daewoo. The exclusion of its bulky Bupyeong plant from the sales package shows that a long way lies ahead and that the acquisition is only a half-done deal. The Bupyeong plant should work to restructure itself and raise its productivity to meet General Motors' requirements so that it can join the Daewoo assets to be taken over by the U.S. auto giant. Daewoo's labor and management deserve credit for reaching a collective bargaining agreement to support a sale of core assets, clearing the last obstacle to a final acquisition deal.
The sale will transform the local auto industry, now dominated by the Hyundai-Kia automotive group, to create a three-way competition among Daewoo-GM, Hyundai-Kia and Renault-Samsung. The remaining task is to enable Daewoo to create synergies with the U.S. carmaker's sophisticated technologies and marketing prowess, rather than becoming a production subcontractor, so as to develop Korea's auto industry and improve its competitiveness.