Although Mike Horn, the president of Magna, the third largest parts and components company in the world, exclaimed that about 50% of global business growth this year will come from Asia, most of the growth will depend on China, but Chinese parts and components companies do not intend to limit themselves to the country.
Delphi, Visteon, and other European and American spare parts companies in trouble are about to become their intraday meals. After China’s Wanxiang started the first shot of overseas M&A, Fuyao, Huaxiang, Dongfeng and other domestic parts and components companies are attacking the fire.
Huaxiang "Snake Swallow"
Wanxiang, Fuyao, and Dongfeng are busy pursuing bids for Delphi, a North American parts company, and part of Ford's parts and components business. At the same time, it is a private company in Xiangshan, Ningbo and a top 500 auto parts supplier in the world. The Huaxiang Group contributed a total of 3.4 million pounds (approximately RMB 51.95 million yuan), which included a wholly-owned subsidiary of Indigo, a Magna Group, and an 85-year-old British Lawrence Interior Decoration Co., Ltd.
“The chairman of the company’s board of directors, Zhou Cimei, signed an agreement with Amber company vice president amber on December 6th. Huaxiang Group owns 100% of Laurence shares.†said Mr. Ma, vice president of Huaxiang Group, which is responsible for the acquisition. Through this acquisition, Huaxiang will take the opportunity to become an OEM supplier for brands such as Cadillac, PSA Peugeot Citroen and Saab.
Prior to the acquisition of Lawrence Automotive Interiors, Hua Xiang was just a supplier of Infineon's joint venture in China. At the initial stage, through a simple relationship, Huaxiang learned that due to the high labor costs in the UK and the pressure of price cuts in the auto parts industry in recent years, Lawrence has been losing money in the past three years. Selling companies or finding partners with low-cost manufacturing advantages has been It is the only way for companies to survive.
"During the visit to China, the President of the company had visited the Huaxiang Group. They offered us the intention to sell Lawrence." Mr. Ma said that after inspection, Huaxiang made an initial purchase in February this year. After two rounds of negotiation, Huaxiang purchased 100% of Lawrence’s shares. "Lawrence's advantages in real wood manufacturing technology can make up for Huaxiang's gaps, especially its world famous mahogany products."
Huaxiang said that after the acquisition, they will transfer part of the production capacity of Lawrence to China, and at the same time expand the establishment of Huaxiang's technology research and development center abroad based on the Lawrence Corporation's technical department. The Lawrence Auto Interior Decoration Co., Ltd., which is actually controlled by the Chinese company, will begin operations on January 1, 2007 and strive to recover costs within two years.
"Universal" acquisition
From the previous supply relationship to the target of acquisition, Huaxiang’s acquisition of Lawrence’s road has the same purpose as the original Wanxiang Curve entered the US market.
In 1984, Scheele Company, one of the three major suppliers of parts for the automotive repair market in the United States, placed orders of 30,000 sets of universal joint assemblies to Wanxiang Group by way of OEM. Wanxiang also used Scheler to enter the North American market. In 1998, when Scheler suffered a serious loss, Wanxiang America’s sales had reached US$30 million. Two years later, Wanxiang cooperated with the American LSB Company and bought the Scheler brand, technology patents and special equipment for US$420,000. After the completion of the first single multinational acquisition, Wanxiang became the largest company in the world with the most patents for universal joint products. In the next few years, Wanxiang has acquired two other parts companies UAI and Rockford.
After the completion of the acquisition, Wanxiang selectively transferred technology and production to China and continued to use the original brands and channels to obtain high value-added profits. It is reported that Wanxiang’s return on investment in parts and components business in the United States is as high as 100%.
After the Delphi and Ford parts companies were in trouble, Wanxiang began to show great interest. Although Wanxiang U.S. CEO Ni Ping said: “At this stage, it is not appropriate to comment on the acquisition of Wanxiang in North America.†However, he and Lu Guanqiu, Chairman of Wanxiang Group’s Board of Directors, all mentioned: Delphi, Ford, GM, and Chrysler. The company, Wanxiang is interested in negotiating with them.
A new wave
Fuyao Glass and Dongfeng have the same willingness as Wanxiang. Although Fuyao is not satisfied with the bid, it is certain that auto glass exports will be Fuya's largest growth business in the next few years. With a price advantage of less than 20% from its international competitors, Fuyao expects to reach US$30 million in export revenue in 2007.
“There are a lot of parts and components companies that are worth acquiring. Some foreign parts companies want to find technical cooperation partners in China through our website platform. Some simply put themselves in grass and want to sell.†But Gasgoo.com Chief Analyst Chen Wenkai believes that "the large-scale mergers and acquisitions of China's spare parts companies are too early to focus on foreign exports."
More than 90% of the auto parts enterprises that are exporting companies in China are concentrated in the aftermarket, that is, they are making OEMs to the traders or manufacturers in the European and American aftermarket. This is also the first step to universally go abroad. “With the strengthening of intellectual property protection in China, more and more foreign spare parts companies will look for Chinese parts and components companies to do OEM businessâ€, Chen Wenkai said, can not rule out the second and third generation of domestic OEM companies A universal.
In fact, in addition to Chinese auto parts companies attempting overseas acquisitions, other global auto parts makers have also started a wave of mergers and acquisitions around the world: a U.S. company owned by Bridgestone tires for US$1.05 billion to acquire the US Bandag Inc., Japan Nippon Sheet Glass Co. acquired British glass producer Pilkington PLC for US$3.8 billion, and Nippon Paint Co. acquired Rohm & Haas Co., based in Philadelphia, for US$230 million. Automotive Coatings Business...
Different from the purpose of overseas acquisitions by Chinese companies, most of these auto parts companies have expanded with the pace of overseas development of customers (host plants) in order to meet the growing supporting needs of vehicle companies in the United States, Europe, and other parts of the world.
Obviously, China's vehicle companies are still slow to follow up. OEMs including Chery, SAIC, and other self-owned brands are trying hard to become members of the world auto club. By then, China's spare parts companies will be able to get rid of the situation in the international market alone and form a coordinated operation.
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