IF it were not for a potential lifeline thrown by Chinese investors Pang Da Automobile Trade Co and Zhejiang Youngman Lotus Automobile, cash-stripped Swedish carmaker Saab would drown in a sea of red ink.

Two Swedish unions are seeking to force Saab into bankruptcy to trigger a wage-insurance plan that would allow more than 1,000 of their members to collect unpaid back wages.

Saab went to court seeking protection from creditors but was rebuffed. The company is now appealing that lower court ruling, claiming it can restructure itself with a proposed 245 million euros (US$352 million) investment from the two Chinese automakers.

A court hearing on the appeal is scheduled in a Swedish court on September 26. The proposed Chinese investment in the carmaker is currently pending approval by Chinese regulatory authorities.

As part of Saab's moves to demonstrate progress in easing its liquidity crisis, the Swedish automaker signed a 70 million euros bridging-loan agreement recently to transfer technology related to its Phoenix concept car to Youngman.

Earlier to that, Pang Da and Youngman have purchased 60 million euros worth of vehicles from Saab to try to help it stay afloat.

Chinese ambition

Pang Da and Youngman's keen on Saab is reminiscent of other attempts by Chinese carmakers to take over struggling global brands to catapult themselves into the international automotive arena. Most recently, domestic carmaker Geely Holding Group acquired Swedish premium car brand Volvo.

For Chinese carmakers, foreign takeovers are considered shortcuts to improve their technology and enhance their brand profiles. Chinese automakers are being encouraged by government officials to become more globally competitive.

Under agreements signed in June, Youngman said it would invest 136 million euros for a 29.9 percent stake in Saab's parent Swedish Automobile, previously known as Spyker, while Pang Da would pay 109 million euros for a 24 percent stake. The establishment of manufacturing plants and sales units in China was part of the deal.

Questions are inevitably raised about the wisdom of relatively weak Chinese carmakers taking on big name international brand companies.

Is the Saab investment really a sound one?

Saab is well known for its aerodynamic design that traces its roots to aircraft company Svenska Aeroplan AB, founded in 1937.

In 2010, General Motors Co sold Saab to Dutch-based Spyker as the 60-year-old brand struggling to keep alive amid rising costs and slumping sales.

For the last two decades, Saab slowly lost much of the niche uniqueness that had defined its brand. At the same time, the international auto industry, particularly in the US, was losing its sheen, too, while China was building itself into the world's largest car market.

Saab ran into a cash crunch again earlier this year as sales suffered. Production at its plants has been suspended since April, with money owing to suppliers and workers.

During its first liquidity crisis in 2009, Saab sold the vehicle platforms of its Saab 9-3 and 9-5 models and other tooling and powertrain technologies to China's Beijing Automotive Industry Holding Co in a deal valued at US$200 million.

The intention of Pang Da and Youngman to acquire valuable technologies was thwarted by the fact that the majority of models made by Saab now are under licensed production from General Motors, which means there is a high cost for Saab to pay for intellectual property rights owned by GM.

Mounting costs

Analysts reckon Pang Da and Youngman will face additional costs if they plan to manufacture Saab models in China.

"Saab is not comparable to Volvo because there is not so much valuable technology left there," said Yale Zhang, director of consulting firm Automotive Foresight in Shanghai. "What remains is the brand alone."

Can Pang Da and Youngman revive the brand?

Hebei Province-based Pang Da is one of the largest dealer groups in China, which handles the Toyota, Honda and Subaru brands. But the company lacks experience in carmaking.

Zhejiang-based Youngman, which is partnered with the Lotus Group, is also a small potato in China's auto industry. Its major presence is in buses and trucks under two joint ventures with the German companies Neoplan and MAN.

Brand revival

"The revival of Saab would be time-consuming, involving a huge amount of follow-up investment and requiring a better understanding of cultural differences," said independent auto analyst Zhong Shi.

Skeptics have only to point at SAIC's ill-fated takeover of South Korean's Ssangyong Motors.

The China's biggest vehicle producer bought into Ssangyong at the end of 2004 in a deal valued at US$500 million.

In 2009, SAIC ended its four-year control of the SUV specialist after a Seoul court approved Ssangyong's bankruptcy protection application.

Industry analysts blamed the failed strategy on SAIC's lack of knowledge of the South Korean business environment, especially in the realm of labor unions.

Still, there are those who understand why Pang Da and Youngman see opportunity in the fading brand.

There is an old Chinese saying: A lean camel is bigger than a horse.

Pang Da, a dealer facing slower sales amid the cooling vehicle market in China, is hoping the Saab models will help generate a new revenue channel. The company raised about US$1 billion last April as the first car dealer in China to go public.

Youngman sees the investment as a way to parlay itself into the passenger car realm, using Saab's international distribution network to sell its own vehicles.

Both small companies have two things in common: they are cashed up and they have strong ambitions to become major players in the auto industry.

According to Swedish reports, skepticism is running high about Saab's chances of survival. The company is a small niche player in the premium car segment -- a highly competitive market dominated by the likes of BMW. Last year, Saab sold about 80,000 units worldwide.

Many analysts think Chinese regulators may also not see the silver lining in that cloud.

The chances of government approval of the Saab investment are iffy at best, they say.

Analyst Jay Nagley of Red Spy Automotive was quoted as saying, "The Chinese government is concerned that its car industry is becoming too fragmented. It wants to see fewer, larger firms that can compete on the international stage. It doesn't want to see ambitious companies like thes two buying a very small Swedish manufacturer."

Zhang from Automotive Foresight agreed. "The collapse of Saab might present an even better investment opportunity for Pang Da and Youngman," he said.