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Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Globalisation is very weird.

The above picture is the most commonplace thing in the world. There is a gift wrapped car in a shopping mall. Obviously, this is a prize in a competition, designed to encourage people to visit the shopping mall and spend money in the shops. The car is first generation Daewoo Matiz – later known as the Chevrolet Spark – an old design now but one of the cheapest cars in production in the world. It’s an utterly awful car to drive, but it is A NEW CAR!. If you are a shopping centre owner, then the main thing is that it is a new car. That it is the cheapest new car in existence is not the point. The point is that the prize in our competition is A NEW CAR! It’s a city car, also. If you are in a place where the traffic is bad enough, a lack of acceleration and an inability to drive above 80km/h matters less, anyway.

Well, yes. And no.

There is, of course a story.

I live in London by myself. My family are in Australia. London is cold, dark, and deserted between Christmas and New Year, and it can be depressing to be here by yourself. Although I don’t need much of an excuse to go travelling at the best of times, I particularly try to get out of town, ideally to somewhere where there is no Christmas. Last year this led to my finding myself in Tehran, Iran. I didn’t quite entirely escape Christmas – there was still a Christmas tree in the lobby of my hotel – but I mostly escaped Christmas. Certainly, the traffic gridlock on December 25 was horrendous, as indeed the traffic gridlock is horrendous in Tehran on most days. There is a metro in Tehran, but Tehran is a sprawling city which makes it only so useful, a little like the metro in Los Angeles. Tehran is a sprawling city of multi-lane freeways and horrendous traffic in a basin surrounded by mountains, a little like Los Angeles. In the expensive suburbs of north Tehran, it’s not especially hard to find yourself in achingly hip cafes that might almost be in Silver Lake, too, but let’s go there some other time.

The whole “enormous, car-centric sprawl with an immense freeway system” makes Los Angeles a polluted city by American standards, but in all honesty it is much less polluted than it used to be. Modern cars are more efficient and have more advanced emissions control systems than was the case even a few years ago, and like all developed world cities, the air in Los Angeles is much cleaner than it once was.

In Tehran, though, imagine a rapidly growing city, that despite sanctions is getting richer. Demand for cars is high, but due to those sanctions Iran is unable to import cars from many industrial countries. Cars stay on the road longer, which means the pollution will remain worse for longer than in many other cities of similar levels of development. Sanctions are uneven, so it is much easier to do business with carmakers in certain other countries than others. When you look around, you find that most of the cars are Korean, or French, or will be oddly familiar things or brands you haven’t heard of.

This gets us back to the overtly Korean car in the shopping mall.


On December 26, I went for a walk around the Grand Bazaar in Tehran. This is very like enormous bazaars in many other Middle Eastern cities, but inevitably with Iranian characteristics. As in any country that has been economically separated from global institutions by sanctions, the level respect for the intellectual property law of foreign countries is not high. (I particularly liked the fact that there is a section of the Grand Bazaar devoted entirely to shops selling fake labels for fake designer clothes. Yes, here you can by an enormous roll of labels saying “Gucci”, or “Prada” to attach to the clothes that you have produced in your local store in Tehran’s enormous garment district, whether or not those clothes in any way resemble anything that is actually produced by Gucci or Prada).

The bazaar is fun, and I really wish I had purchased a Persian carpet when I was there, but people actually shopping for clothes prefer more modern, indoor, air conditioned surroundings. (I might suggest that this is particularly true of female people – oops, looks like I will never work for Google. But I digress). Therefore, there is a modern shopping mall next to the bazaar, which resembles a modern western shopping mall full of fashion outlets. And in fact, it resembles a western shopping mall in terms of having a competition for customers with a NEW CAR as a prize.

So, the car. It’s a Daewoo Matiz. Korean. Fits well into the narrative of sanctions and Korean cars.

Except, things get weirder.

Daewoo was one of three Korean chaebols that were making and exporting cars in the 1980s and early 1990s. Most South Korean economic activity is driven by chaebols: family owned economic groupings that are well connected, connected to one another in ways that are are inscrutable, and often very corrupt.

The automotive division of the South Korean chaebol Daewoo expanded massively around the world. It was probably the second most significant South Korean car-maker after Hyundai. Daewoo opened factories in quite a few other countries – particularly those in which the government was willing to give subsidies (and, er, kickbacks) to foreign entities that were willing to open factories in their countries, and/or places where local governments and/or carmakers were fairly desperate to get investment and/or expertise from anywhere. Daewoo ended up building factories in places like Poland, Ukraine, Vietnam, and Iran. The Matiz went into production in all of these places at that time. It was quite cute to look at (due to the fact that the general design was by Italian designer Giorgetto Giugiaro, as a possible candidate to be a new Fiat 500, but which was rejected by Fiat) but wasn’t much fun to drive, at least partly due to having an awful and massively underpowered engine. Daewoo set up a global dealership and distribution network through which to sell its cars, and managed to sell a fair few, largely because they were cheap. They fairly quickly got a reputation for not being very good, but they were cheap. (Daewoo’s Korean competitor Hyundai started with a similar approach, but then gradually improved quality and established itself as a fairly solid mid-market brand).

In any event, the Asian economic crisis occurred in 1997. This led to a transition from dictatorship to democracy, some of the least economically viable economic structures collapsing, and some of the most extreme corruption being punished. The family of Kim Woo-jun, founder of Daewoo, turned out to be corrupt and autocratic even by the glorious standards of the country, and the conglomerate collapsed and several members of the relevant Kim family went to prison. Many of the international subsidiaries of the automotive company turned out to be completely unviable and/or reliant on corrupt practices to survive, but it turned out to be possible to convince General Motors (through its Australian subsidiary Holden, and with probably some greasing of palms or at least tax breaks) to acquire the brand, the models, the Korean factories and a few of the more viable of the other operations around the world).

Having acquired Daewoo, GM discovered that although Daewoo had been selling cars in many places around the world, it did not have a good reputation, and the cars were hard to sell at a profit. It experimented in Israel by selling Korean manufactured Daewoo cars under the “Chevrolet” brand, a brand which had not often been sold outside North America. The cars were not well known, but there was surprisingly large brand awareness though movies, Bruce Springsteen songs, and other aspects of American culture that had filtered around the world. Daewoo discovered that cars sold as “Chevrolet” sold far better than did cars sold as “Daewoo” in Israel, and GM therefore rebranded Daewoo’s cars and distribution networks as Chevrolet almost everywhere, and used a combination of Daewoo’s and their own distribution network to establish Chevrolet as a global brand in parallel with its various regional brands such as Opel, Vauxhall and Holden. The Daewoo Matiz was rebadged as the Chevrolet Spark, and most of the other models in Daewoo’s product lineup were also renamed and rebadged.

GM also started behaving like an American company rather than a Korean one. It got into an intellectual property dispute with Chinese manufacturer Chery over the design of a car called the Chery QQ, which it claimed was too close in design to the Matiz/Spark, and GM sued for damages. Intellectual property law at the time was held in little respect in China and not much more in South Korea, so at the time I found this curious.

In any event, establishing Chevrolet as a global brand gave GM opportunities for global sponsorship and advertising that it had not had before (and with respect to which it had been at a disadvantage to more global car brands such as Ford and Toyota), which is why we have seen such things as Chevrolet badges on the shirts of Manchester United players. Eventually, though, people figured out that Korean Daewoo made Chevrolet cars weren’t very good quality either, another global financial crisis occurred in which GM got into financial trouble, the experiment in creating a global Chevrolet brand collapsed into a sea of red ink, and that was more or less that. But I digress. However, if Donald Trump is still reading at this point, I have just answered his question.

There was one place, however, where GM was unable to rebadge Daewoo cars as Chevrolet. That was Iran. Korean companies were and are able to operate in Iran (as, seemingly are French companies – French brands are to be seen everywhere in Tehran), but American companies are not, GM had to divest itself of Daewoo’s Iranian subsidiary, and to stop selling the knock-down kits of the Daewoo Matiz that were being used for assembly of cars in Iran. Kerman Khodro, Daewoo’s now divested Iranian partner was then faced with a dilemma. It had existing assembly lines on which to produce the Daewoo Matiz, but it lacked to expertise to build the parts from which to assemble the cars from scratch, and was no longer able to purchase the parts from Korea.

So, what happened. Well, a year or two later, Kerman Khodro started producing a car called the MVM 110, which looked an awful lot like the Daewoo Matiz / Chevrolet Spark. As it happened, this car was a licensed copy of the Chinese Chery QQ, and Kerman Khodro was now buying knock-down kits from Chery of China, and was assembling them on the same production line they had been previously using to assemble the Daewoo Matiz. This was easy, because as it happens, the Chery QQ is a part for part copy of the Matiz. A door from one will fit onto the other. A headlight from one will fit on the other. An obscure cog from the engine of one will fit into the other.

Staring at the MVM 110 that was wrapped up as a prize in the Iranian shopping mall, this was all suddenly clear to me. *This* was why GM had been so willing to sue. It wasn’t just that Chery had produced a car that looked like a Matiz. They had started producing the Matiz, without permission. As to whether it was a simple case of reverse engineering or something more sinister than that, I don’t know, but it saved the bacon of the Iranian carmakers.

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24 comments to Globalisation is very weird.

  • Lee Moore

    London is cold, dark, and deserted between Christmas and New Year, and it can be depressing to be here by yourself.

    What are you talking about ? This is absolutely the best time to be in London, when it’s cleared of its nasty human infestation.

  • Julie near Chicago

    Interesting piece, Michael. Thanks. :>)

    .

    Ugly little sucker, though. Like all of today’s “regular” cars. (Not up on the latest from Porsche, etc., alas.)

    They all look just like the really ugly footwear that’s pretty much standard nowadays, unless you are going to a really dressy event.

  • That is a terrific article that only Michael Jennings could have written 😀

  • Schrodinger's Dog

    Michael,

    A fascinating, well-written article. Thank you.

    A couple of observations though, but neither of them to do with cars.

    You found a Christmas tree in an Iranian hotel? Amazing. You wouldn’t find one in most American hotels these days.

    The Iranian carmakers were almost certainly muslim, so whatever else the Cherry MVM 110 saved, it certainly wasn’t their bacon!

    Finally, do you suppose the 110 designation, as in Cherry MVM 110, might be its top speed in km/h? That’s about 68mph, which isn’t impressive: it’s on a par with the original Citroen 2CV and Morris Minor.

  • Paul Marks

    I think the writers were comparing post World War II L.A. to the old Los Angeles – when the studios controlled the movie theatres (before the Supreme Court’s demented “Anti Trust” bit of Legal Positivism – which declared that any ravings from the government, no matter how contrary to the Natural Justice of the Common Law, were “law”) which eventually turned factory style movie studios that could turn out films in a week or so, into the new “industry” where it takes hundreds of millions of Dollars and years of time to make a film – and where the film (at the end of this mad process) is often not very good anyway, not even technically good (as one will often not even to be able to hear clearly what the actors are saying – as they do not face the camera and sound system as they speak and “project, dear boy, project”.

    On traffic – in the old Los Angeles there was the largest electric transport system in the world (the past was, in many ways, more advanced than the present – look at an old Harold Lloyd film of American cities in the 1920s, compare those cites with the same places now).

    It is fashionable to blame General Motors for the decline of mass transit – and the rise of inefficient smog filled cities. However, government price controls and pro union laws are the real cause. General Motors just acted as the undertaker (funeral director) for systems that had already been murdered.

    On Iran – at least you do not say it is our “natural ally” like that person in the Spectator magazine who is blind to the Iranian nuclear weapons program, and deaf to the cries of “Death to America”.

  • NQS

    I’m confused about one thing.

    Where did they find an intact Yugo to copy for this POS?

  • Mr Ed

    South Koran

    What a happy typo, and funny how South Korean firms have no problem dealing with a country that seems to help their hostile neighbour with its military build-up. It is amazing that the Chevrolet brand sat there unnoticed for so long by people who would instantly know the reference from ‘Drove my Chevy to the Levy‘.

  • Rob Fisher

    This blog has been missing Michael Jennings posts. I especially like the nested digressions that turn out to be relevant when everything is tied together at the end, like a finely plotted thriller novel.

  • Michael Jennings

    Yes, “saved their bacon” was a clumsy expression to use in that context. The joys of it being late at night and just wanting to push the publish button before going to bed.

    The technique of going of at a seeming tangent and then coming back to the point and tying it in later is one I am fond of. I do it in conversation, too. In that case, what normally happens is that someone else interrupts you before you manage to come back to the point, and everyone is oddly confused as to why you changed the subject like that. It’s good in writing, though.

  • the “Chevrolet” brand, a brand which had not often been sold outside North America.

    One of the Lada SUVs in Russia sells under a Chevrolet badge, or at least it did. I drove one, it was a right piece of junk.

  • Sam Duncan

    “It wasn’t just that Chery had produced a car that looked like a Matiz. They had started producing the Matiz, without permission.”

    Very enjoyable post, but I seem to recall that being pretty common knowledge, or at least strongly suspected and hinted at, at the time. The general feeling was that dodgy-looking Rolls-Royce and Range Rover knockoffs were one thing, but this was going too far. The Iranian angle is a twist, though. I didn’t know that.

    You could have done a similar tangent-and-back post about one of the reasons for there being so many French cars, too. I don’t have the time, so, long story short: in the late ’60s the Iranians do a deal with the Rootes Group to build Hillman Hunters under licence; shortly afterwards, Rootes is bought by Chrysler; in the late ’70s, as Chrysler desperately tries to avoid bankruptcy, it sells what is now Chrysler Europe to PSA; 40 years on, Iran is building Peugeots under licence instead of Hillmans. Oddly enough, the revolution doesn’t seem to have affected this at all. Things might have been different if it had still been Rootes or Chrysler.

  • Michael Jennings (London)

    I drove one, it was a right piece of junk.

    GM decided to make Chevrolet a global brand. Not necessarily a bad decision in itself, but it then decided to use it as a channel to sell vehicles produced by failing carmakers that it had procured on the cheap during financial and other crises in various countries.

    Compare with Volkswagen, who also procured one or two failing carmakers on the cheap in other countries during political and financial crises. Volkswagen didn’t change the branding, but carefully revamped the production lines and models produced using its engineering expertise and attitude to quality control.

    Hence, when my rental car turns out to be a Skoda, after driving it for a few minutes I am thinking “What a nice car”, whereas if it is a Chevrolet, I am really not.

  • Michael Jennings (London)

    In Tehran, you see French brands everywhere. You also see South Korean brands everywhere. You see non-French European brands a little, but not as much as French brands. You see mountains of semi-anonymous Chinese stuff, and that is worth another post in itself. You see no American brands at all except for Coke and Pepsi, which you see everywhere. Apparently there is a cola exception to the sanctions.

  • Alisa

    I really enjoyed this, Michael – so great to have you back.

  • Penseivat

    I had 7 trouble free years with a Daewoo Tacuma, a mini mpv, which had 3 airline style individual seats in the back. It held 5 adults comfortably, plus luggage, and cruised at motorway speeds without any problems as well as smoothly coping in city traffic. Only upset was doing 75(ish) on the M4 and being overtaken by a Daewoo Matiz with 4 blokes in it (heading to a football match in Cardiff if the scarves were anything to go by).

  • pete

    I’ve driven my employer’s Chevrolet Spark a few times times in and around Manchester and Liverpool.

    It doesn’t seem any different to drive than my own Ford Fiesta or my partner’s Ford Ka.

    Turn the key, start the engine off you go.

    All three of them are utterly awful cars to drive on the region’s crowded roads, as are all other cars.

    I cycle nearly everywhere for trips of ten miles or shorter which is why I’m only on my third car in nearly 40 years of driving.

    Life is too short to use a car in town.

  • Sam Duncan

    Oh yes, Michael, there’s a Renault JV as well. The French don’t seem to be so worried about sanctions as us Anglo-Saxons. I remember thinking it was a bit rich that they were leading the mob against “Bush’s war for oil” when most of the Iraqi oil industry was run by TotalFinaElf.

    That said, I do think those Peugeots owe a lot to Rootes. Talking of defunct British joint ventures, I see Khodro Kaveer is the Iranian licencee of BMC, which is a former Turkish JV of, er… BMC. As you say, globalisation is weird. You may have seen some Ashok Leylands on your travels, too. Very strange, for a Brit, to see the old “flying plughole” on the front of a modern vehicle.

  • Patrick Crozier

    To experience the true ghastliness of a Chevrolet Spark you need to try driving it at speed up a hill.

  • bobby b

    The Chery QQ saga got even weirder in a globalization-ironic sort of way. (You have to be able to derive enjoyment from incestuous IP legal plots to appreciate the story.)

    The story/rumor (none of which I can personally vouch for) goes like this:

    At the same time that GM was partnering with Daewoo in SK, it was also in a major joint venture in China with the Shanghai Automotive Industrial Corporation (one of the top Chinese auto makers) since sometime in the 90’s.

    Chery, another large Chinese automaker, merged with SAIC around 2000. So, technically, GM and Chery and Daewoo and SAIC were all in business together in various incestuous ways when the complete plans and specs for the GM-Daewoo Matiz mysteriously appeared in the Chery factories.

    This was sort of quietly assumed (by some) to be either GM screwing Daewoo, or a bigwig in GM-Daewoo making a personal bundle by selling the documentation. GM had to sue Chery to protect its position with Daewoo.

    The lawsuit was ended several years after it started with no payments by anyone, but face was saved when SAIC “undid” its merger with Chery. Chery got to keep making the QQ (and licensing it out), but lost its connection to SAIC. Chery started splitting profits from the faux-QQ sales in Iran with Kerman, which still had some unspecified connection to Daewoo even though GM had left the relationship (so perhaps Daewoo got dealt back in to the QQ profits.)

    It’s a small world after all.

  • Michael Jennings (London)

    I had this “BLT” in a cafe above a bookshop in south Tehran. When I asked, I was told that the “bacon” was made from beef. I think. It was quite tasty. My bacon was saved.

  • ed in texas

    Sounds like a continuation of the operations that NEC (Nippon Electric) ran up on. In the early 2000’s NEC was take to court in Chicago over house fires caused by DVD players that people had bought. Only problem was, NEC had never manufactured DVD players. At all. An investigation found a manufacturing plant in SE China where they were made, which was apparently cloned from a Samsung plant for an identical product. The employees thought they worked for NEC; they all had ID badges and got paid with ‘NEC’ checks.
    The plant manager died in a car crash before he could be questioned.

  • Julie near Chicago

    Was he any relation to Vince Foster?

  • A Rob

    Michael – this is just the most splendid of posts.
    I like the detail and I like the “seeming” tangents.

  • Michael Jennings (London)

    I have always rather liked the design of the original Matiz/Spark, which is the one which became the Chery QQ and the MVM 110. It is cramped and underpowered, but it is perfectly adequate as a city car in places where journeys are short and traffic is such that you are never going to want to drive it very fast. Its inadequacies become clear when you drive out of a city and try to make it accelerate, usually unsuccessfully.