On November 15th, at the third round of the Chinese and foreign CEOs round table meeting, Vice Minister of Commerce Chen Jian pointed out that the Ministry of Commerce will study and introduce new policies and measures to encourage Chinese enterprises with favorable conditions to actively carry out foreign investment and transnational operations. We will continue to expand new areas and new approaches for foreign investment cooperation. Specifically, we will expedite the construction of a legal framework for going global in terms of institution building, deepen the reform of management mechanisms with investment as the core, and provide legal protection for the development of outbound businesses.
Prior to the introduction of the support policy, the competent authorities have formulated the ambitious goal of going global. On November 11, six ministries and commissions, including the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, the General Administration of Customs, and the General Administration of Quality Supervision, Inspection and Quarantine, jointly issued opinions on promoting the sustained and healthy development of China's automotive product exports, and clearly proposed the automobile and its components. The export target is to strive to achieve an average annual growth of 10% from 2009 to 2011; by 2020, China's auto and auto parts exports account for 10% of the world's total auto product trade.
Parts companies overseas mergers and acquisitions are being staged
Compared with the thunder of overseas vehicle M&As, the overseas acquisition of auto parts is not uncommon. Geely acquired Australian transmission company DSI, Jingxi Heavy Industries acquired Delphi of the United States, Wanxiang Group acquired US DS car steering shaft business. In the case of little-known people, they finished cleanly and neatly.
Recently, a news about Ningbo Huaxiang’s intention of overseas mergers and acquisitions is spreading. Ningbo Huaxiang CFO Jin Liangkai also stated that the company is interested in international mergers and acquisitions and hopes to succeed next year. Prior to this, Ningbo Huaxiang had raised enough cash. In August and September, Ningbo Huaxiang successively transferred 73.80% of Luping’s shares and 29% of Fu’ao’s shares, which was converted into approximately RMB680 million. Together with Ningbo Huaxiang’s original RMB200 million in cash, its accounts The cash is about 1 billion yuan.
Prior to this, China’s largest overseas auto parts merger and acquisition case was a real success. On November 2nd, BWI officially signed a contract to acquire the damping and braking business of Delphi Corporation of the United States. Jing Jianyi, chairman of BWI, said that it will purchase equipment and intellectual property rights for Delphi-related businesses and Delphi's customer and product supply contracts at a price of no more than US$90 million.
According to the acquisition plan announced by Jingxi Heavy Industry in April, the acquisition target will include Delphi's customers and product supply contracts in addition to machinery and equipment and intellectual property. In other words, BWI buys not only Delphi's component production and processing bases and technology centers, but BWI also buys Delphi's qualifications to supply BMW, Audi and other international companies. The most immediate change that this acquisition brings to BWI is that it will build a world-class automotive parts processing and manufacturing base in the Fangshan area using the acquired technology and talents. In an interview with the media, Fang Jianyi, chairman of BWI, talked about the three benefits that this acquisition brings to BWI: “First of all, the acquisition of a customer base that will enable Jingxi Heavy to enter Delphi quickly, including Mercedes-Benz. , BMW, General Motors and other well-known automobile manufacturers; Second, BWI can rely on Delphi's world-leading technology and production experience in braking and suspension systems; Third, through the merger of global companies, establish credibility in the international automotive industry ."
The same small but very rapid component acquisition, as well as Geely's acquisition of Australian transmission company DSI.DSI at the beginning of this year, is one of the only two independent automatic transmission companies independent of auto vehicle companies in the world. 180,000 units. “When the media around the world debated Geely’s acquisition of Volvo, I quickly locked in and acquired DSI within a month.†Li Shufu was not unfathomable in the face of the media’s mention of the acquisition of DSI. He did not say that it was the DSI’s preference. The other party's technology, "We first look at the DSI advanced automatic transmission technology!" This acquisition makes Geely quickly become its own brand in the transmission of the most powerful companies and large output. According to media reports, Geely’s 300,000 automatic gearbox projects have been officially signed in Tongliang and will be completed in 2010. In 2011, domestic auto companies will be able to use Geely automatic transmissions. The Wanxiang Group, the largest domestic parts supplier that has completed overseas acquisitions, has successfully acquired all of the effective assets of the US DS car steering axle business this year. The latter’s main business was to supply the three major automotive companies in the United States.
M&A is more affordable
The pressure caused by the foreign financial companies’ financial turmoil has extended to the upstream parts and components companies, and also provided an opportunity for auto parts companies to acquire overseas companies. A survey of global parts suppliers shows that more than 85% of secondary suppliers believe that some of their Tier 1 suppliers will not be able to support the next 12 months. On the whole, almost 85% of U.S. suppliers and 70% of European suppliers think that some of their OEM customers will also fail in the next 12 months. Automotive suppliers are thus faced with an unprecedented crisis, and this is just an opportunity for Chinese parts and components companies.
BWI’s clean acquisition of part of Delphi's business and Geely's rapid acquisition of DSI all indicate that the Chinese auto parts industry has made great efforts and has made considerable progress. We hope to see more of this progress in the future, which will in turn create a component production capacity that matches the largest global market in the automotive giant.
Overseas acquisitions of parts and components companies should provide support
Parts are the key factors that really determine the success or failure of a country’s auto industry. At present, the incompatibility with the entire vehicle industry is that the domestic auto parts industry is facing a great dilemma: the number of companies and the overall quality is not high, exports have fallen sharply, and the domestic market has also fallen into a situation surrounded by foreign capital.
Looking at the restructuring and acquisition of parts and components companies this year, besides the acquisition of Delphi by Jingxi Heavy Industry, Geely’s acquisition of DSI, an Australian transmission company, and Wanxiang Group’s acquisition of the US DS automobile steering shaft business, the overseas acquisition of parts and components companies can achieve greater benefits. Even though Delphi was in bankruptcy protection for various reasons, its R&D capabilities, quality, and brand have been recognized by outsiders. Jingxi Heavy Industries has bought the Delphi brake and suspension system and also has sales channels to overseas markets. The lack of technology, lack of brand, and lack of channels of Chinese parts and components companies is very important. One of the success precedents was Wanxiang Group's acquisition of overseas auto parts companies and successful expansion of overseas markets.
The reorganization and acquisition of the upper reaches of the automotive industry chain will have a far-reaching impact on the Chinese automotive industry. According to industry experts, core technologies have been dominated by foreign companies for a long time. China's spare parts industry lacks technology accumulation. Increasing the level of research and development through acquiring advanced foreign technologies is an important driving force for the merger and reorganization of parts and components companies. By using the technological advantages of foreign companies for my own use, we can achieve rapid development in a relatively short period of time.
In the automotive industry revitalization plan, it is mentioned that the "key component technology will be autonomous." The state will also invest 10 billion yuan in the next three years as a special fund for the technological transformation and technological upgrading of automotive companies. Driven by the policy, more and more Chinese parts and components companies regard Bargain-hunting Overseas as the best way to obtain core technology. However, some insiders pointed out at the same time that taking advantage of the financial crisis to diversify overseas spare parts related business, for the Chinese auto parts industry where there is a lack of technical accumulation, it is possible to obtain the greatest benefit from “curve passingâ€, but it should also be understood that it has been acquired. The company's development direction has the ability to continue the business of the acquired company, and fully estimates the differences between different cultures, and learns lessons learned from the overseas acquisition of the entire vehicle company.
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