Recently, Weichai Power obtained the assets of the French company Baudouin with a bid of 2.99 million euros through its subsidiary Weichai Power International Development Co., Ltd. The book value of this asset was approximately 13.82 million euros, and the transaction is now undergoing administrative approval procedure.
It is understood that for the company to become bigger and stronger, the acquisition of foreign companies is an important step for Weichai Power to go abroad, which is of great significance for China's equipment manufacturing companies to achieve internationalization. However, the M&A incident has also caused widespread questioning, arguing that domestic companies’ overseas acquisitions still have a lot of domestic work to do.
Mergers and acquisitions become bigger and stronger
The National Information Center pointed out in a report that at present, China’s auto parts companies are still relatively small, 80% of the companies above the scale of sales revenue is less than 100 million yuan, the added value of products is low, and the level and quality of technological innovation need to be enhanced. The merger and reorganization of enterprises is a matter of no delay.
An analyst from a consulting firm admits to reporters: “In the next few years, the joint, merger, acquisition, and reorganization of China’s auto parts companies will continue to occur. Only when they grow and develop in China can we consider overseas mergers and acquisitions. For auto parts companies, it is not a realistic tactical requirement but a long-term strategic need."
Strengthen prevention and reduce risk
2008 was a year of crazy mergers and acquisitions by Japanese companies. According to statistics, Japan’s total overseas M&A in 2008 was as high as US$77.8 billion, ranking first among Asian countries. Compared with the high-risk practices that used to pursue iconic assets in the past, they now prefer small and medium-sized transactions.
Peng Xin, an analyst at New Era Securities Automotive, said that the overseas acquisition of Weichai Power is relatively small and the risk factor is relatively small. Choosing a French company is to conduct a tentative investment for risk considerations. Even if there is a loss, it is controllable. Moreover, in terms of technology, diesel engines in the domestic automotive industry have become more advanced. Without considering the introduction of advanced technologies, Weichai Power may see that the prices of foreign machines are relatively cheap.
In addition, more industry experts believe that Chinese auto parts companies in overseas M&A should also guard against various risks. We must do a good job of various auditing work, and strive to have a comprehensive assessment of the potential acquisition risks for all possible risks, including financial risks, market risks, internal organization and operational risks; companies must also have professional trading and operational management capabilities. , Minimize the external influence on M&A activity itself.
The government guides orderly competition
At present, in the process of mergers and reorganizations of foreign companies, there has been a phenomenon of disordered domestic enterprises, which has not only increased production costs, but has also caused the waste of corporate and national resources, often outweighed by losses.
Zeng Qinghong, vice chairman and general manager of GAC Group, once called for the “two-conference†period. “The Chinese government should provide support and guidance for Chinese auto companies to carry out mergers and acquisitions at home and abroad on the basis of international conventions, in order to avoid domestic counterparts’ foreign asset prices. In the event of serious devaluation, vicious competition will be conducted."
With favorable conditions, China's spare parts manufacturers have seen the hope of overseas mergers and acquisitions, but only by practicing their internal skills, can they have a place in the fierce competition in the international market, and can take a solid footing in the journey of overseas mergers and acquisitions.
Views of all parties
Li Xianjun, Director of Automobile Development Research Center, Department of Automotive Engineering, Tsinghua University:
Throughout the decade from the end of the 1990s to the beginning of this century, international auto parts and components companies have seen many waves of industrial restructuring and corporate mergers and acquisitions. They learned from successful experiences and learned lessons from failures. For Weichai Power, It is the most critical and important thing at present.
Xu Changming, Director of the Information Resource Development Department of the National Information Center:
China is not lacking resources and energy-based enterprises. What we need is leading technology and application of technology industrialization. Therefore, Weichai Power must insist on the control of technology when discussing details of specific M&A with French companies.
China's internal combustion engine industry association deputy secretary-general Ge Hong:
From the perspective of Weichai Power's own development, we will acquire Baudouin's products, technologies and brands through the acquisition, and we can further expand our product lines, explore the international market, learn from the globalization and development of product development and technical management experience, and expand our products. The scope of market support has formed new competitive advantages and promoted the rapid development of various businesses. At the same time, it is conducive to accumulating experience in the operation of international capital and is conducive to the cultivation of international talents, which will lay a solid foundation for Weichai Power's development strategy of “internationalized new chopping woodâ€.
Pei Pingnan, Vice President of School of Economics and Management, Beijing University of Technology:
It is hoped that domestic companies will take a sensible and objective view of Weichai’s acquisition of a French parts and components company. In my opinion, there is still a lot of homework to do after the acquisition. After Weichai has implemented overseas mergers and acquisitions, it is necessary to make efforts to adapt to local policies, regulations, and cultural habits, and gradually realize localization of operations.
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