Following the implementation of overseas mergers and acquisitions by Wanxiang, auto parts companies such as Huaxiang also reported overseas acquisitions. According to industry analysts, the auto parts industry will become a hot spot for overseas mergers and acquisitions by Chinese companies.
"China's auto parts companies 'going out' is a major trend." Tian Chen investment industry researcher Chen Qiaoning believes that local excellent parts and components companies take the initiative to conduct overseas mergers and acquisitions, directly facing the international market, this is a historical progress .
Overseas mergers and acquisitions opened
Wanxiang, Fuyao, and Dongfeng are busy pursuing bids for Delphi, a North American parts company in trouble, and Ford's parts and components business. At the same time, private companies in Xiangshan, Ningbo and Huaxiang Group, one of the world's top 500 auto parts companies, have invested a total of 3.4 million pounds (approximately RMB 51.95 million), which will be a wholly-owned subsidiary of the Magdalena Group’s Indigo Corporation. The 85-year-old British Lawrence Interiors Co., Ltd. was in the bag. Through this acquisition, Huaxiang will take the opportunity to become an OEM supplier for brands such as Cadillac, Peugeot Citroen and Saab.
“Most parts and components companies in China are considering export or ongoing export mode trials, and some of the larger component companies have embarked on the journey of cross-border mergers and acquisitions.†According to the report, parts and components companies represented by Wanxiang, Fuyao, Huaxiang and Dongfeng will target acquisition targets for Delphi, Visteon, and other European and American parts companies in distress, aiming to enter the first camp of multinational components. Quickly become an OEM supplier in overseas markets.
Tian Mingcun, a research fellow at Tianxiang Investment Industry, said: “At present, auto parts companies that carry out overseas mergers and acquisitions, such as Wanxiang, Huaxiang, and Fuyao, all have a common feature that they are privately-owned enterprises in related fields. It has been operating for a long time and has a certain degree of competitiveness in the subdivided product areas. But for most auto parts companies, overseas mergers and acquisitions are still far away."
Guo Hao also said that to make China's spare parts enterprises become the main force in overseas market mergers and acquisitions, can not do without the cooperation of our own brand companies. When more Chinese self-innovating vehicle companies invest and build factories abroad, the days when most of China’s auto parts companies go out and acquire foreign parts companies are not far away.
Crossing barriers
In fact, through the current prosperous and exciting expectations of the future, China’s auto parts companies also have barriers to overseas acquisitions.
According to relevant statistics, by 2010, the total trade volume of world auto products will reach 1.2 trillion US dollars. The auto giants will accumulate up to 50 billion U.S. dollars in spare parts purchases in low-cost countries by 2007, of which 70% plan to target China. .
However, Shen Ningwu, deputy secretary-general of the China Association of Automobile Manufacturers, stated that the parts and components industry must not only pursue the superficial scenery: the number is increasing rapidly, but the technology content of the products is low, the added value of exports is low, and the market OEM ratio is low.
Ni Wei, ASIMCO's vice president of global sales and marketing, also stated that China's auto parts companies have cost advantages, but also have technology, and no technology alone can not achieve long-term development.
Starken said that Chinese companies are currently trying to export, but the scale is small, the quality is also difficult to meet international standards, and it is difficult to export products to foreign mature markets, so Chinese automakers need to obtain better technology through mergers and acquisitions of overseas companies. .
In addition to technical barriers, trade barriers cannot be ignored. Chen Qining believes that an important reason for China's auto parts companies to go overseas for mergers and acquisitions is that exports are subject to many restrictions abroad, including various trade barriers. To bypass these restrictions, overseas mergers and acquisitions may be a shortcut.
Export experience is very important
For those auto parts companies that are about to embark on the overseas merger and acquisition journey, Guo Shuo said: “It is wise for China’s spare parts companies to go through exports to a target country to gain experience before overseas acquisitions, and then consider implementing them. Overseas M & A."
A related study for the first time overseas production branches showed that the success of the operation is directly related to the export of the previous period. If there is no early export experience in establishing a branch in the target country, the probability of success is low.
Guo Song believes that compared with other overseas entry modes, companies engaged in overseas M&A need to be prepared to invest more funds, management and other resources. This higher resource also means taking more risks. At the same time, companies need far more information preparation for making investment decisions before overseas M&As than access models such as export or licensing operations. In addition, overseas mergers and acquisitions also have high start-up costs, a long period of return on investment, and difficulties in divestment at the time of failure or strategic change.
In addition, Ni Wei believes that overseas mergers and acquisitions and expansion of overseas markets must be aware of overseas cultural backgrounds, otherwise it is very likely to cause conflicts. In mergers and acquisitions negotiations, due to their different cultural backgrounds, the breakdown of negotiations is not uncommon.
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