Vertical joint funding and technology perfect blend
On June 9, China Petroleum & Chemical Corporation and China National Petroleum Corporation officially took a stake in Shenyang Blower Group. After the completion of the equity participation, Sinopec and PetroChina will each take 30% of the shares of Shengu in the form of capital injection, and Shenyang City's SASAC will account for the remaining 40% of the equity.
Shengu has long been one of the major technical equipment suppliers of Sinopec and PetroChina. Its large-scale centrifugal compressors have a domestic market share of over 85%, and large blowers account for 40%. Sinopec and CNPC's participation in the Shengu Drum, on the one hand, can provide Shenkuang with the funds needed for development and a broader market, and realize the Shengu march to the world through Sinopec and CNPC's overseas investment; on the other hand, it can better promote major petrochemical equipment. The localization of the company will reduce the costs of Sinopec's and PetroChina's technical equipment investment and project construction. It is understood that in the past decades, Sinopec and PetroChina have adopted home-made centrifugal compressors developed from Shengu, saving at least US$500 million more than using imported equipment. At present, Shengu has formulated the goal of building a multibillion-dollar enterprise group during the “Eleventh Five-Year Plan†and then building China’s largest general machinery and equipment manufacturing base. The development momentum is strong.
On July 23rd, the major assets reorganization dust of the entire acquisition of Kaifeng Air Subsidiary Group Co., Ltd. was settled. This move will further open up the domestic and international air separation market for Kaifeng air separation, improve the core competitiveness of enterprises, and make it the vanguard of the domestic air separation industry, laying a solid foundation.
Kaifeng air separation is a key enterprise in China's air separation equipment industry, while Wing Coal Group is a state-owned large-scale coal enterprise and a top 500 enterprise in China. The industry covers coal mining and washing, metal mining and mining, and coal chemical industry. The acquisition of Kaifeng air separation by the Wing Coal Group can, on the one hand, introduce advanced management concepts and provide a solid financial guarantee for the future development of Kaifeng air separation. On the other hand, Wing Coal Group has obtained huge technical equipment support for the development of the coal chemical industry. It has made a big step in the depth of its own industrial chain, and it can be described as a perfect match.
â— Reviews
From these two typical cases, we can see that whether it is a share or an overall acquisition, there is one thing in common: that is, the perfect combination of the capital advantages of downstream users and the technological advantages of upstream equipment manufacturers. Equipment manufacturing industry is a capital-intensive industry that requires a large amount of working capital to maintain production operations and scientific research and development. This is exactly the weakness of many manufacturing companies. Large-scale user companies have strong capital and “free money†to develop new profit channels. At the same time, it also has the need to do a good job in localization of major equipment and reduce its dependence on foreign investment. In this context, vertical and reorganization of the two sides can often hit it off and get the desired results.
Privatization From "Running the Dragon" to the Leading Role
The predecessor of Maoming Gravity Petrochemical Machinery Manufacturing Co., Ltd. was Maoming Petrochemical Machinery Factory. This petrochemical equipment manufacturing enterprise with nearly 50 years of history transformed itself from a maintenance and processing company subordinate to Maoming Petrochemical to a company after the privatization reform in 2005. The private enterprises of independent market entities, through technological progress and new product development, have realized the leap from the single undertaking of internal mechanical repair and accessory production tasks to the major development and manufacturing of petrochemical new types of major equipment. At present, the company has a number of professional production lines such as finned tubes, cracking furnaces, heat transfer tubes, and loop reactors. At the same time, the company has changed its past and other tasks such as passive Maoming Petrochemical arrangements, the market awareness has gradually increased, began to actively seek business opportunities, the current service customers in addition to Maoming Petrochemical, has been throughout the petrochemical enterprises in Xinjiang, Shanghai, Hainan, Huizhou and Zhanjiang , Orders increased significantly and sales revenue grew rapidly. At present, Maoming Gravity's ethylene cracker convection section, polypropylene loop reactors, high pressure heat exchangers, high efficiency finned tubes, casing molds and other large equipment products have gradually expanded to the national market. In particular, the ethylene cracker convection section accounts for more than 80% of the domestic market share, has been used for Yanshan Petrochemical, Shanghai Petrochemical, Qilu Petrochemical, Maoming Petrochemical and other ethylene renovation project. In the future, Maoming Gravity will actively create a domestic first-class petrochemical equipment manufacturing base.
Similarly, the original Sinopec Group Qilu Petrochemical Company Machinery Plant was restructured in 2005 and Shandong Qilu Petrochemical Machinery Manufacturing Co., Ltd. was established. Since the reorganization of the original machinery factory of Qilu Petrochemical Company for 2 years, the market awareness has been greatly enhanced. From the past, it has only passively shifted its services to Qilu Petrochemical to actively develop its own domestic and foreign markets. The newly-established company focused on the development trend of large-scale refinery equipment in China, successively raised funds to increase equipment manufacturing capacity by 100 million yuan, built new first and second heavy-duty container shops, and purchased heavy-duty container production equipment and advanced non-destructive testing equipment. , Formed a heavy pressure vessel manufacturing as a leader in the processing system. The equipment manufacturing capacity has been greatly improved. The capacity of sheet rolling has been increased from the original 40 millimeters to 180 millimeters. The lifting capacity of a single equipment has been increased from the original 50 tons to more than 500 tons. The sheet processing capacity has been increased from the original 3.5 meters to 6.5 meters. The penetration of the rays increased from the original 40 mm to more than 200 mm. In May this year, the China National Chemical Equipment Association said after reviewing the company that the company’s pressure vessel manufacturing capacity has risen to the top five in Shandong Province and the top five pressure vessel manufacturers in the country. The privatization reform not only enhanced the company's design and processing power, but also brought about gratifying economic benefits. Before the restructuring, the annual output value of the machinery factory was about 200 million yuan, but it was in a long-term loss state, and employees were frequently laid off and bought out. In just two years after the restructuring, the annual output value of the new company rose from 200 million yuan to 300 million yuan, and profits have risen steadily. Both employees' income levels and work enthusiasm have made a qualitative leap.
â— Reviews
In the period of planned economy, many large-scale chemical companies have their own machinery factories as logistics support for their own equipment processing and maintenance. After decades of accumulation, these machine factories have better equipment and talent bases, stricter management, and professional service experience and tendering advantages. However, under the original system, the autonomy and enthusiasm of the machine factory were severely constrained. These advantages have not been fully exerted. After the privatization reform, the new company will be the master of its own, taking advantage of the flexible advantages of the private enterprise mechanism, identifying the target market and flagship products, and attacking the open market on all four sides, often able to obtain rapid growth opportunities.
Inducing Foreign Capital to Take Profits and Reduce Disadvantages
In November 2003, the original Changsha Chemical Machinery Plant was restructured and restructured to establish a domestic-foreign equity joint-venture company, Changsha Weigh Chemical Machinery Co., Ltd. The company's predecessor, Changsha Chemical Machinery Factory, was founded in 1958 and is a typical old state-owned enterprise that produces chemical special equipment. According to a person in charge of Changsha Weizhong, the company after the introduction of foreign capital restructuring has undergone tremendous changes, the historical burden of the company has been solved, the output value has grown at an annual rate of over 30%, and the company has used the newly injected funds to build a new plant. The scale of production has been expanded, and the per capita income of employees has also increased year by year. According to Changsha Weizhong's development plan, by the end of the “Eleventh Five-Year Planâ€, the company will build a domestic first-class heavy chemical machinery manufacturing center, and achieve an annual output value of more than one billion yuan.
In 2000, Lanzhou Lanshi Group Co., Ltd. of China and National Oilwell Waco Co., Ltd. jointly invested and set up a Sino-US joint venture Lanzhou Lanshi National Oil Well Petroleum Engineering Co., Ltd. Lanshi Group is a large-scale enterprise group mainly engaged in oil drilling and drilling machinery, refinery and chemical equipment and general machinery manufacturing. US National Oilwell Waco is a world-renowned supplier of drilling technology equipment. Lanshi Group separated its oil drilling rig manufacturing business and formed a joint venture with National Oilwell Waco. The US invested US$21.58 million, which accounted for 60% of the total registered capital. At the same time, it provided corresponding new technology products, management experience and sales network. The state-owned and old enterprises with serious difficulties in their operations suddenly revitalized their lives. The joint venture company has world-class professional qualifications. Relying on the world-class technical support from National Oilwell Waco, the design and manufacturing level of oil drilling machinery is at the leading position in the country. The products are exported to all over the world and become the global logistics supply of National Oilwell Waco Corporation. One of the most important suppliers in the chain. Lanshi Group has also become China's largest manufacturing base for oil drilling and mining machinery. It has quickly entered the industry of an internationalized enterprise from a typical old state-owned enterprise in the west.
At present, GE and Siemens’ participation in the Shengu Group's negotiations is being actively promoted. Once the two parties reach an agreement on technology transfer, the foreign investment will sink into the implementation stage, and Shengu will become a model for diversified ownership restructuring of domestic equipment manufacturing backbone enterprises. . At one time, foreign investors were stunned by such high quality assets as Shengu and Shaanxi Drum. However, with the sudden change of domestic positions on foreign mergers and acquisitions, this intention has become increasingly unrealistic. Seeing the rapid development of the Chinese market and the increasing value of the Shengu market, giants such as GE and Siemens could not wait to come up with a compromise: exchange technology for equity participation. It is reported that Shengu will eventually choose one of GE and Siemens to exchange its own core technology with its minority stake (separated from the 40% stake held by Shengu). It can be expected that this will be a "win-win" result. What is particularly gratifying is that Shen Drum has made a qualitative leap in its strength and self-confidence in facing foreign capital. “Foreign capital holding is not allowed, and core technologies are to be obtained at the same time.†The bottom line of this negotiation is the domestic dream.
â— Reviews
For a long time, domestic equipment manufacturers and local governments are keen to attract foreign investment. However, since Carlyle’s acquisition of Xugong’s case in 2005 “exposureâ€, the Chinese government has a clear position on the acquisition of domestic equipment manufacturing leading enterprises by foreign capital: the prohibition of hostile takeover by foreign capital and restrictions on the proportion of foreign capital participation. At the end of 2005, Siemens took a 70% stake in Jinxi Chemicals Co., Ltd. and obtained an absolute controlling share of Jinxi Chemical Turbine Factory. This not only caused Jinxi Chemical to lose the core technology, market channels and talent of turbine machinery, but also enabled Siemens. The elimination of a strong competitor in the Chinese mainland has taken another step towards monopolizing the Chinese turbine machinery market. This has caused great shocks and controversies in the industry. It is certain that future mergers and acquisitions like this kind of "daggers" will be difficult to repeat because China has in the past indiscriminately attracted foreign capital to a new stage of selectively using "green" foreign capital.
On June 9, China Petroleum & Chemical Corporation and China National Petroleum Corporation officially took a stake in Shenyang Blower Group. After the completion of the equity participation, Sinopec and PetroChina will each take 30% of the shares of Shengu in the form of capital injection, and Shenyang City's SASAC will account for the remaining 40% of the equity.
Shengu has long been one of the major technical equipment suppliers of Sinopec and PetroChina. Its large-scale centrifugal compressors have a domestic market share of over 85%, and large blowers account for 40%. Sinopec and CNPC's participation in the Shengu Drum, on the one hand, can provide Shenkuang with the funds needed for development and a broader market, and realize the Shengu march to the world through Sinopec and CNPC's overseas investment; on the other hand, it can better promote major petrochemical equipment. The localization of the company will reduce the costs of Sinopec's and PetroChina's technical equipment investment and project construction. It is understood that in the past decades, Sinopec and PetroChina have adopted home-made centrifugal compressors developed from Shengu, saving at least US$500 million more than using imported equipment. At present, Shengu has formulated the goal of building a multibillion-dollar enterprise group during the “Eleventh Five-Year Plan†and then building China’s largest general machinery and equipment manufacturing base. The development momentum is strong.
On July 23rd, the major assets reorganization dust of the entire acquisition of Kaifeng Air Subsidiary Group Co., Ltd. was settled. This move will further open up the domestic and international air separation market for Kaifeng air separation, improve the core competitiveness of enterprises, and make it the vanguard of the domestic air separation industry, laying a solid foundation.
Kaifeng air separation is a key enterprise in China's air separation equipment industry, while Wing Coal Group is a state-owned large-scale coal enterprise and a top 500 enterprise in China. The industry covers coal mining and washing, metal mining and mining, and coal chemical industry. The acquisition of Kaifeng air separation by the Wing Coal Group can, on the one hand, introduce advanced management concepts and provide a solid financial guarantee for the future development of Kaifeng air separation. On the other hand, Wing Coal Group has obtained huge technical equipment support for the development of the coal chemical industry. It has made a big step in the depth of its own industrial chain, and it can be described as a perfect match.
â— Reviews
From these two typical cases, we can see that whether it is a share or an overall acquisition, there is one thing in common: that is, the perfect combination of the capital advantages of downstream users and the technological advantages of upstream equipment manufacturers. Equipment manufacturing industry is a capital-intensive industry that requires a large amount of working capital to maintain production operations and scientific research and development. This is exactly the weakness of many manufacturing companies. Large-scale user companies have strong capital and “free money†to develop new profit channels. At the same time, it also has the need to do a good job in localization of major equipment and reduce its dependence on foreign investment. In this context, vertical and reorganization of the two sides can often hit it off and get the desired results.
Privatization From "Running the Dragon" to the Leading Role
The predecessor of Maoming Gravity Petrochemical Machinery Manufacturing Co., Ltd. was Maoming Petrochemical Machinery Factory. This petrochemical equipment manufacturing enterprise with nearly 50 years of history transformed itself from a maintenance and processing company subordinate to Maoming Petrochemical to a company after the privatization reform in 2005. The private enterprises of independent market entities, through technological progress and new product development, have realized the leap from the single undertaking of internal mechanical repair and accessory production tasks to the major development and manufacturing of petrochemical new types of major equipment. At present, the company has a number of professional production lines such as finned tubes, cracking furnaces, heat transfer tubes, and loop reactors. At the same time, the company has changed its past and other tasks such as passive Maoming Petrochemical arrangements, the market awareness has gradually increased, began to actively seek business opportunities, the current service customers in addition to Maoming Petrochemical, has been throughout the petrochemical enterprises in Xinjiang, Shanghai, Hainan, Huizhou and Zhanjiang , Orders increased significantly and sales revenue grew rapidly. At present, Maoming Gravity's ethylene cracker convection section, polypropylene loop reactors, high pressure heat exchangers, high efficiency finned tubes, casing molds and other large equipment products have gradually expanded to the national market. In particular, the ethylene cracker convection section accounts for more than 80% of the domestic market share, has been used for Yanshan Petrochemical, Shanghai Petrochemical, Qilu Petrochemical, Maoming Petrochemical and other ethylene renovation project. In the future, Maoming Gravity will actively create a domestic first-class petrochemical equipment manufacturing base.
Similarly, the original Sinopec Group Qilu Petrochemical Company Machinery Plant was restructured in 2005 and Shandong Qilu Petrochemical Machinery Manufacturing Co., Ltd. was established. Since the reorganization of the original machinery factory of Qilu Petrochemical Company for 2 years, the market awareness has been greatly enhanced. From the past, it has only passively shifted its services to Qilu Petrochemical to actively develop its own domestic and foreign markets. The newly-established company focused on the development trend of large-scale refinery equipment in China, successively raised funds to increase equipment manufacturing capacity by 100 million yuan, built new first and second heavy-duty container shops, and purchased heavy-duty container production equipment and advanced non-destructive testing equipment. , Formed a heavy pressure vessel manufacturing as a leader in the processing system. The equipment manufacturing capacity has been greatly improved. The capacity of sheet rolling has been increased from the original 40 millimeters to 180 millimeters. The lifting capacity of a single equipment has been increased from the original 50 tons to more than 500 tons. The sheet processing capacity has been increased from the original 3.5 meters to 6.5 meters. The penetration of the rays increased from the original 40 mm to more than 200 mm. In May this year, the China National Chemical Equipment Association said after reviewing the company that the company’s pressure vessel manufacturing capacity has risen to the top five in Shandong Province and the top five pressure vessel manufacturers in the country. The privatization reform not only enhanced the company's design and processing power, but also brought about gratifying economic benefits. Before the restructuring, the annual output value of the machinery factory was about 200 million yuan, but it was in a long-term loss state, and employees were frequently laid off and bought out. In just two years after the restructuring, the annual output value of the new company rose from 200 million yuan to 300 million yuan, and profits have risen steadily. Both employees' income levels and work enthusiasm have made a qualitative leap.
â— Reviews
In the period of planned economy, many large-scale chemical companies have their own machinery factories as logistics support for their own equipment processing and maintenance. After decades of accumulation, these machine factories have better equipment and talent bases, stricter management, and professional service experience and tendering advantages. However, under the original system, the autonomy and enthusiasm of the machine factory were severely constrained. These advantages have not been fully exerted. After the privatization reform, the new company will be the master of its own, taking advantage of the flexible advantages of the private enterprise mechanism, identifying the target market and flagship products, and attacking the open market on all four sides, often able to obtain rapid growth opportunities.
Inducing Foreign Capital to Take Profits and Reduce Disadvantages
In November 2003, the original Changsha Chemical Machinery Plant was restructured and restructured to establish a domestic-foreign equity joint-venture company, Changsha Weigh Chemical Machinery Co., Ltd. The company's predecessor, Changsha Chemical Machinery Factory, was founded in 1958 and is a typical old state-owned enterprise that produces chemical special equipment. According to a person in charge of Changsha Weizhong, the company after the introduction of foreign capital restructuring has undergone tremendous changes, the historical burden of the company has been solved, the output value has grown at an annual rate of over 30%, and the company has used the newly injected funds to build a new plant. The scale of production has been expanded, and the per capita income of employees has also increased year by year. According to Changsha Weizhong's development plan, by the end of the “Eleventh Five-Year Planâ€, the company will build a domestic first-class heavy chemical machinery manufacturing center, and achieve an annual output value of more than one billion yuan.
In 2000, Lanzhou Lanshi Group Co., Ltd. of China and National Oilwell Waco Co., Ltd. jointly invested and set up a Sino-US joint venture Lanzhou Lanshi National Oil Well Petroleum Engineering Co., Ltd. Lanshi Group is a large-scale enterprise group mainly engaged in oil drilling and drilling machinery, refinery and chemical equipment and general machinery manufacturing. US National Oilwell Waco is a world-renowned supplier of drilling technology equipment. Lanshi Group separated its oil drilling rig manufacturing business and formed a joint venture with National Oilwell Waco. The US invested US$21.58 million, which accounted for 60% of the total registered capital. At the same time, it provided corresponding new technology products, management experience and sales network. The state-owned and old enterprises with serious difficulties in their operations suddenly revitalized their lives. The joint venture company has world-class professional qualifications. Relying on the world-class technical support from National Oilwell Waco, the design and manufacturing level of oil drilling machinery is at the leading position in the country. The products are exported to all over the world and become the global logistics supply of National Oilwell Waco Corporation. One of the most important suppliers in the chain. Lanshi Group has also become China's largest manufacturing base for oil drilling and mining machinery. It has quickly entered the industry of an internationalized enterprise from a typical old state-owned enterprise in the west.
At present, GE and Siemens’ participation in the Shengu Group's negotiations is being actively promoted. Once the two parties reach an agreement on technology transfer, the foreign investment will sink into the implementation stage, and Shengu will become a model for diversified ownership restructuring of domestic equipment manufacturing backbone enterprises. . At one time, foreign investors were stunned by such high quality assets as Shengu and Shaanxi Drum. However, with the sudden change of domestic positions on foreign mergers and acquisitions, this intention has become increasingly unrealistic. Seeing the rapid development of the Chinese market and the increasing value of the Shengu market, giants such as GE and Siemens could not wait to come up with a compromise: exchange technology for equity participation. It is reported that Shengu will eventually choose one of GE and Siemens to exchange its own core technology with its minority stake (separated from the 40% stake held by Shengu). It can be expected that this will be a "win-win" result. What is particularly gratifying is that Shen Drum has made a qualitative leap in its strength and self-confidence in facing foreign capital. “Foreign capital holding is not allowed, and core technologies are to be obtained at the same time.†The bottom line of this negotiation is the domestic dream.
â— Reviews
For a long time, domestic equipment manufacturers and local governments are keen to attract foreign investment. However, since Carlyle’s acquisition of Xugong’s case in 2005 “exposureâ€, the Chinese government has a clear position on the acquisition of domestic equipment manufacturing leading enterprises by foreign capital: the prohibition of hostile takeover by foreign capital and restrictions on the proportion of foreign capital participation. At the end of 2005, Siemens took a 70% stake in Jinxi Chemicals Co., Ltd. and obtained an absolute controlling share of Jinxi Chemical Turbine Factory. This not only caused Jinxi Chemical to lose the core technology, market channels and talent of turbine machinery, but also enabled Siemens. The elimination of a strong competitor in the Chinese mainland has taken another step towards monopolizing the Chinese turbine machinery market. This has caused great shocks and controversies in the industry. It is certain that future mergers and acquisitions like this kind of "daggers" will be difficult to repeat because China has in the past indiscriminately attracted foreign capital to a new stage of selectively using "green" foreign capital.
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