Merger and Acquisition of Inspur Waves in Machinery Equipment Industry

"China's enterprises have become the protagonists of the sixth wave of mergers and acquisitions in the world," and they are constantly exposed to the media, and relevant data also show that Chinese companies' mergers and acquisitions have become the protagonist in terms of amount and quantity, while at the same time, the reform of domestic state-owned enterprises. The general trend also further stimulated the topic of mergers and acquisitions.

Against this background, Chery Heavy Industries has become a typical sample: the withdrawal of state-owned assets, industrial investors and capital investors. According to the announcement of the Changjiang Equity Exchange, the base price for the transfer of Chery Heavy Industries held by the Wuhu Construction Investment Corporation, Chery Holdings and Wuhu Yuanda Venture Capital Company is 2.8 billion yuan, and the transferee explicitly requested that “China's equipment manufacturing in 2013 be Ranked among the top 100 companies in the industry and ranked top 50 private equity investment institutions with assets greater than RMB 20 billion.

After three years of incubating, Chery’s heavy industry can become a hot topic in the industry. As one of Chery’s major divisions, Chery completed its business layout with industry-recognized construction achievements: the fields of agricultural equipment, engineering machinery, and industrial vehicles are involved. Among these, agricultural equipment is the key layout of Chery Heavy Industries.

The Chery Heavy Industry in Hot Words: How to Break the Industry Growth?

From the start time, the timing of the birth of Chery Heavy Industries was not very good. In 2011, the stimulus from 4 trillion was more than two years. It was the capacity expansion of the construction machinery industry that came to an end when the policy stimulus gradually came to an end, and the market demand entered. In the relatively slow period, overcapacity has long plagued companies in the sector. As a result, the debate surrounding the transfer of Chery Heavy Industries' equity is centered on the prospects of the agricultural machinery industry.

Since 2011, the construction machinery industry has gradually entered a downturn, and overcapacity has also become a tail-end industry dilemma. The data shows that in 2013, the total return on assets of First Tractor Co., Ltd., the only listed agricultural equipment manufacturing company in China, was only 1.29%. At the same time, CNH, which ranks first in the world in the production of agricultural tractors and combine harvesters, had a total return on assets of 2.23% in 2013.

However, many believe that the machinery and equipment industry is brewing "dark horses" in a changing situation, especially in various segments. An analyst pointed out that the prosperity of the traditional machinery industry has been maintained at the bottom for a long time, and there is little room for recovery in terms of simple market demand. However, with the background of state-owned enterprise reform, the integration of resources, transformation and upgrading, part of the The machinery subsectors involved in the new economy are facing a major change.

The industry generally holds this view. The relevant experts from the China Machinery and Equipment Industry Association said that in the past ten years, the proportion of China's agricultural machinery industry has increased from 10% to 19.7% of last year. It can be seen that the power of China's agricultural machinery is improving. Therefore, there are certainly opportunities; it is necessary to improve China's machinery equipment. In the global right to speak, this is feasible, but we need to have a certain amount of expression.

Some industry analysts pointed out that the biggest difference between domestic agricultural machinery manufacturers and foreign agricultural machinery manufacturers is not in profitability, but in innovation and research and development. How to better adapt to the needs of market competition and enterprise development through reform and innovation, not only is Chery's heavy industry, but also the issue that must be considered in the entire Chinese equipment manufacturing industry.

In addition to being optimistic about the overall expectations, Chery’s own development has also performed well. In just three years, it has completed the industrial chain layout. Currently, it has more than 460 core supplier-oriented supply chain industry strategic alliances and nearly 1,000 domestic two-tiered companies. Network resources and overseas network resources. At the same time, Chery Heavy Industries spends 5% of its annual sales revenue on R&D each year, and its innovative capabilities are also widely recognized.

M&A and innovation: Can black horses be trained according to this?

In fact, back in the wave of global mergers and acquisitions, Chery Heavy Industries and even China's current turbulent M&A market is not new. The data shows that there have been five major global mergers and acquisitions in history. In the 1990s, it was only known as the fifth wave of mergers and acquisitions. In the past ten years, US companies have made trillions of dollars in In mergers and acquisitions, the situation continued until 2001, when the September 11 incident finally slowed down.

The result of the last wave of mergers and acquisitions is clear: M&A has brought continuous innovation to enterprises, and U.S. companies continue to control the global market. Whether Chinese enterprises, known as “nursemakers”, can seize this wave of M&A wave opportunities and continue to innovate to form control over the market, it remains to be seen.

However, from the perspective of the central government's successive "state-owned enterprise reforms," ​​"promoting the development of private enterprises," and "advancement of industrial restructuring and upgrading," and the prospect of the central government's macroeconomic policy of "stabilizing and improving," the outlook is expected to end. It is in this context that Chery Heavy Industries has attempted to achieve industrial upgrading through "state-owned assets withdrawal," mergers and acquisitions, and strategic restructuring.

"The ability to provide new technology management and globalization through cooperation, alliance and integration can shorten the time for transformation and upgrading." Chery Heavy Industries said that after three years of development, Chery Heavy Industries has begun to take shape and state-owned capital is at this time. The main reason for opting out is to absorb new capital. These newly introduced capitals will have higher requirements in terms of technology, management, and global operations, and can support the sound development of Chery Heavy Industry.

“Introducing the top 50 industrial investors in the machinery manufacturing industry will bring comprehensive support for the development of Chery's heavy industry, including technology, R&D, marketing, and management, and will be even more helpful in promoting its growth and strength.” Industry Analysis It is pointed out that the withdrawal of state-owned assets, the entry of industrial investors, and the strategic capital intervention will form a market-based joint force to promote Chery's heavy industry to achieve industrial upgrading and leap-forward development.

“Starting from this sample of Chery Heavy Industries, the future machinery and equipment industry is expected to usher in a new round of strategic reorganization, which will eventually trigger the transformation and upgrading of China's machinery and equipment industry, and accelerate China's related machinery and equipment industry to the international market. Who is the dark horse, and it is worth looking forward to.” The aforementioned person stated that the equity transfer of Chery Heavy Industries is expected to become the beginning of a leap-forward development of China's machinery and equipment industry through system and mechanism innovation.