DRB HICOM purchased 42.74% of Proton. It retains the Bumi’s ownership of Proton and prevents it from falling into foreigner’s hand. The ministers happily and proudly announced it telling Malaysians that Proton is still in Malaysian (Bumi) control. To me, most importantly, how Proton restart its journey to against competition from other car makers after this transaction? What kind of contribution and sparks that DRB can bring to Proton vice versa?
As we know, DRB Hicom is specialized in commercial vehicle and heavy machinery production. The core business of DRB Hicom has nothing to do with passenger cars. In contrary, Proton has no experience in commercial vehicle design and production, the “most commercial” vehicle is Proton Arena that is not performing very well. I cannot see any benefit enjoyed by both parties from this business transaction. What actually happen is DRB Hicom spends money without strong business justification (ROI) and Proton is “saved” from falling into foreigner’s control. We never see any sign that this transaction prepares both parties to face the competitive global market. Globalization is an unavoidable fact, we have no right to choose whether we want to take part or withdraw. What we can do it to prepare ourselves to compete and win over any opponents that potentially exist in the market. Along the way, we can see IBM sold its PC department to Lenovo, Macro took over by Tesco globally, and merger of ExxonMobil, UMW (TOYOTA) took over Perodua etc. All the activity is to strengthen both parties to compete in the market. The party that taking over helps the taken over party to reform the operation and ensures the continuity of the employment. When the operation and other aspects are reformed, the taken over party are having better chance to perform better and making profit. Hence, the investing party will have positive or better return of investment (ROI).
From the DRB HICOM and Proton transaction, both party not able to help each other directly. DRB Hicom does not have experience in designing passenger cars, car engines, tactics in passenger cars sales etc. Moreover, DRB Hicom also not able to benefit from the assembling facilities that Proton owns due to differences in business nature. On the other hand, Proton also does not benefit from DRB Hicom’s experience and expertise. We may see most car makers such as Volvo, Mercedes Benz, Nissan, Toyota etc also making commercial vehicles. However, most of them are having both businesses for donkey years and well establish in the industry.
What Proton needs now I suspect is a strong and experience partner to help it in almost all aspects of the business from design, quality, services and managements. DRB Hicom needs to further strengthen its market dominance in local and explore further into global market. Is the transaction fit for purpose? After closing this transaction, should Proton consider who its next owner is? When can the trendy TIGER dominant the local and global car market? In addition, we must not forget that Lotus International is owned by Proton, how Proton develop and benefit it since acquisition? We must realize that it is not the matter who own Proton, the core issue is who and how can develop Proton and make it a global famous Malaysian Brand!
P/S: Perodua are sold in other country as Perodua from Malaysia although it is partial own by foreign company. Proton missed the chance to learn from Mitsubishi in early stage. It might need to repeat the same process to strengthen itself. It is a tough road but it is the road that can bring prosper to Proton.
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