In this round of global economic crisis, we have been hearing various versions of Chinese car companies overseas. But so far, not many have been confirmed, and there are not many successes. There are only two cases in which domestic auto companies have successfully acquired overseas auto assets. Geely Auto's acquisition of Australia's DSI and Jingxi Heavy Industry have acquired non-core businesses of Delphi Automotive.
In a sense, these two cases all have obvious Chinese characteristics. All of the purchases are auto parts assets. Although the former is the autonomous behavior of private enterprises; the latter, because it involves many SOEs, seems to be regarded as the composition of Beijing's automobile industry in China. To a large extent, it can be said that Beijing's auto industry is in the global automobile pattern.
All along, we all believe that the gap between China's auto industry and overseas is big and it is at the bottom of the smile curve. Why do Chinese auto companies not choose to acquire vehicle assets and instead choose to acquire auto parts business? In my opinion, this is a Chinese-style strategy to save Wei Zhao, and it can even be a wise choice after clearly understanding its own strengths and weaknesses.
State-owned assets and private-equity leverage
Not just cars, it can be said that quite a few Chinese manufacturing industries are at the bottom of the global industry-wide smile curve. Any cheap labor, almost no environmental protection costs, get the earnings of OEMs that look good but are actually fragile. After a global economic crisis, we have found that this model is unsustainable. The reason why the auto industry is still lucky is that unlike most of the hard-won manufacturing industries, we are not the two-out models. The main consumer market is still domestic.
However, with the development of China's auto industry, it will be necessary to go abroad as large-scale home appliances and toys. Before that day, we must change the existing low value-added, low-competitive production model. Where is the best way to break through?
New energy vehicles are too far! This is the direction of the future, but no one knows when it will be possible to commercialize new energy vehicles.
Traditional energy vehicles are still the venue for a decisive battle. However, as we all know, China's own brand automotive industry is far inferior to overseas giants in traditional energy technologies. Although the localization rate is much, it is false. How many joint ventures such as powertrains and other high value-added core components come from joint venture component companies. Even if the money made by a Chinese joint venture looks good, the realization is far less than the profits that multinational cars rely on to transfer technology and sell core components.
In the first half of this year, information from the Ministry of Commerce and the National Development and Reform Commission tells me that the competent authorities are not enthusiastic about acquiring overseas vehicle assets, but they are relatively relaxed about auto parts. Sure enough, Geely Automobile subsequently received news of Australia’s DSI (Automated Vehicle Transmission Corporation of Australia). If you carefully study this acquisition, you will find: This is a relatively cheap bargaining behavior.
After the news of private capital's bottoming out, state-owned capital also reported good news. On May 21, 2009, news from the courts of the Southern District of New York in the United States showed that Chinese company Jingxi Heavy Industries had acquired Delphi's global brake and suspension system. What does BWI buy? It is Delphi's 23 R&D centers for global braking and suspension systems, 10 factories and more than 5,000 employees.
For this acquisition, I asked Delphi’s senior management, who stated that this was a non-core asset that Delphi had prepared for sale when it filed for bankruptcy protection. However, in the eyes of most people, although Delphi does not regard braking and suspension systems as core assets. For companies that lack technology in this area, this is still a big cake.
When an enterprise enters bankruptcy protection or is only one step away from bankruptcy, acquisition requires courage, judgment, and protection. In these two acquisitions, I'm glad to see these two points. Geely Automobile spun off its business related to South Korea’s Ssangyong. BJ West simply bought Delphi’s business instead of Delphi’s.
Jingxi Heavy Industry's acquisition of three
What does this overseas bargain hunter mean for Jingxi Heavy Industry or state-owned capital? It seems to me that this is a good deal for a single move.
First, we got our own brand.
According to the agreement between BWI and Delphi, this part of the assets sold by Delphi will start the new company name from the end of 2009. There is no doubt that after Jingxi Heavy Industries Holdings, this business became its own brand. (Before we used to hold our own brands and our own brands, who actually owns the controlling stakes, what is the original bloodline? What's more, in accordance with the regulations of BWI, BWI is a city in Beijing According to the overall plan of Beijing Automotive Industry, Jingxi Heavy Industries will work as a high-end auto parts industry platform specially established, it can be said that Beijing Jingxi Heavy Industry Co., Ltd The auto parts industry is expected to achieve a quick run.)
On March 30, 2009, Beijing Jingxi Heavy Industry Co., Ltd. was formally incorporated. Shougang Corporation, Beijing Fangshan State-owned Assets Management Co., Ltd. and Baoan Investment Development Co., Ltd. respectively invested 408 million yuan, 200 million yuan, and 192 million yuan. Hold 51%, 25% and 24% respectively. The former two are state-funded or local state-owned assets. The actual controller of Baoan Investment Development Co., Ltd. is China's private auto parts company Tianbao Group. From this it can be seen that the main child who eventually paid for money is state-owned assets.
Second, if it works properly, it will get a better rate of return.
According to previous news, Jingxi Heavy Industry Co., Ltd. may invest US$100 million in cash. How much money can these assets bring? BWI said that Delphi's brake and suspension systems have an annual sales revenue of about 600 million to 700 million U.S. dollars. Even considering the cost of personnel, raw material costs, etc., as long as the operation is properly conducted, BWI should be able to make money from it.
Third, this is a shortcut to occupy sales channels in overseas markets.
What is Delphi? It is an overseas auto parts giant. Even if Delphi is in bankruptcy protection for various reasons, it does not mean that the outside world does not recognize his R&D capabilities, quality and brand. And Delphi's brake and suspension systems have their own sales channels overseas.
Jingxi Heavy bought the Delphi brake and suspension system and gained sales channels to overseas markets. It is difficult to say whether or not it can operate successfully and play its role. However, China still has a successful precedent. That is Zhejiang Wanxiang Group. Wanxiang Group acquired an auto parts company overseas and successfully expanded its overseas market.
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