"Before the overall listing, China Export-Import Bank Dalian Branch will provide USD 27 billion in export credits to FAW Group," a middle-level cadre of FAW said. "This money will help FAW build a liberation truck and red flag sedan base in Russia. The next step will be Will be a larger-scale overseas mergers and acquisitions. The proceeds from listing financing can be repaid, and they can continue to support overseas operations. This series of capitals has come down, and FAW's entire chess game has gone live."
The mysterious FAW Russia "road map" appears to have appeared. The state's policy of encouraging auto companies to go global is tilting toward the three major groups. For FAW, everything is possible.
Mystery
On March 30th, at the Furama Hotel in Dalian, the reporter met Xu Yanfeng, general manager of FAW Group, who participated in the launch of the FAW-VW engine company. “I just came back from Moscow yesterday. FAW and Russia already have cooperation projects, and now we must further advance.â€
On the first floor of the hotel, the staff of the Propaganda Department of the FAW Party Committee affirmed that the general manager of the company is to liberate the CKD (all parts and components) production plant plan. On the same day, FAW officially issued an agreement to liberate the production of medium- and heavy-duty trucks from Russia's Amur Automobile Factory, but it did not confirm the specific progress of the project. Ms. Xing of the FAW Party Committee Propaganda Department said: “The group does not want to disclose the contents of the specific agreement, but can only say that the export volume will reach 10,000 vehicles this year, including commercial vehicles, cars and mini-vehicles. However, in the next two to three years, Russia will become FAW. The most important base for overseas operations of complete vehicles and components."
50 years
From 1956 to 2007, history turned a circle. However, the owners and guests in the timetable have changed positions, and the technology importer of that year has become an exporter. Officials of the National Development and Reform Commission said after receiving a phone call: "This cooperation is entirely possible because Liberation and FAW have this strength."
According to the China Mechatronics Import and Export Chamber of Commerce, last year, the largest single automobile export in China was on FAW and FAW exported 70,000 complete vehicles in the year. Russia used to be one of the countries with the highest home car ownership. However, it has not been able to escape from the situation of less emphasis on quality and quality. Chinese auto exports to Russia increased by 94% last year. Great Wall and ZTE have already started assembling cars in Russia. All this has created conditions for FAW to further develop assembly plants.
FAW first thought of liberation. On July 13, 1956, the liberation CA10, the first truck in New China, went off the production line. Its prototype was the former Soviet Union Stalin Automobile Factory, and it was renamed the Lihacoff Automobile Plant, producing the Gith 150. After 50 years passed, why does FAW let liberation go back to the production of "home"?
In fact, starting with the first generation of trucks, we are improving the Soviet Union's products. There is a cement slope in front of the museum that FAW is building. There will be an old Liberation CA10. The history of the FAW archives is described in the above description. “The CA10 truck was modeled on the Gith 150 truck manufactured by the former Soviet Union's Moscow Stalin Motor Factory. However, this learning was not copied as it was, but based on our national conditions at that time. Some improvements have been made..."
Fifty years later, liberation has been updated for several generations, and Russia’s domestic auto industry is still very weak. Russia’s demand for high-quality trucks is growing. Laojisi can’t meet domestic demand, and Volvo’s and Nissan’s prices are not in line with Russia’s national conditions. The liberation of the shot, according to former vice president of FAW, Rong Huikang said: "The liberation of heavy trucks in Russia will start production from 100 vehicles, initially reaching an annual output of 10,000 vehicles."
1 million
A bigger news comes from the Red Flag. Russia's Lihachev (ZIL Geiler) will appear at FAW's new assembly plant, which will produce red flag cars.
FAW Group Party Committee Propaganda Department revealed that following last year's total automobile production and sales exceeded the million mark, this year FAW passenger vehicles will exceed one million vehicles, including FAW-Volkswagen sales target of 280,000, FAW Toyota 265,000, Tianjin FAW Xiali estimated that in 200,000 vehicles, the number of FAW cars and sea horses will not exceed 150,000, and the number of mini-vehicles will be small. Where will the remaining 100,000 cars come from?
If red flags and mini-cars were to be converted to Russia and could be increased, not only the annual export figures could make up for the lack of autonomous plates, but it could also add to overseas production. FAW will achieve three harvests of performance, profitability and independent research and development. More importantly, the production of the red flag in Russia is a major event that FAW has never had in history, and it is of strategic significance for FAW to go out.
FAW has a slogan called "Red flag does not fall, liberate", but holding two assets in the hand can not be added, which makes FAW very distressed. A middle-level cadre of FAW Group said: "At present, domestic commercial vehicles are highly competitive, new products are seeking low-cost expansion, and sedan competition is more intense. Russia's production base has value in use and the market is also very broad."
According to industry analysts, the production of red flags in Russia can ease the contradiction between supply in the Russian market to some extent. According to the "Russia Development Outline for the Automotive Industry 2002-2010", by 2010, Russia's car production will increase to 2.2 million, while the country's annual demand for cars will be 2.5 million. In addition to competing for the design rights of the presidential car with Gorky and Volg Automobile, Likhashev has no marketable products for such a large family car market.
However, the scale of production of red flags in Russia is appropriate, and whether or not the operations can be copied is the biggest difficulty facing the company. The former Soviet Union's management system is inseparable from FAW's past government and enterprises, and the enterprise-run society is very similar. “They are gathered together. Dozens of people are working around the car. It seems that they don't know where Ford invented the production line, and there is no Toyota Lean production.†An American reporter described the Russian car factory he saw in the 1990s.
The Russian auto industry is also in the hands of a handful of consortiums. As a result of the monopoly, the locally produced Russian models such as the Lada and the Moscowians have a profit of 50%, and such profits are realized on the basis that the domestic vehicle price is less than half that of the imported vehicle. The cost is evident. In Russia, red flags and liberation use their own production quality control systems. Although this system still has a gap compared with domestic excellent joint ventures, it is much more advanced than Russia.
It is reported that the red flag assembly at the Jill plant will use the form of leasing. That is to say, the company owns the production capacity and the market's one-sided technology and product side renting out production plants and workshops. This form is cheaper and more efficient. The lease method chosen by Hongqi clearly can solve the contradiction between the production platform of Hongqi and the Lichachev plant to a certain extent, and the entire relocation surface suffers losses. In the long run, it will save money.
There is room for a cost advantage, and there is potential for market size. This is also the main reason why MOFCOM and the Foreign Trade Department of the National Development and Reform Commission approve FAW's production in Russia. The official of the National Development and Reform Commission said: “We had been to the factory that liberated the imported technology in 1991. At that time, the feeling was that it was another FAW. Now letting FAW go back to CKD, the other party not only needs, we are very familiar with the transformation.â€
$27 billion
FAW is not alone in the battle.
The FAW middle-level cadre who briefed reporters on the situation said very affirmatively that FAW will receive a credit of 27 billion U.S. dollars from the China Export-Import Bank. However, the FAW official did not confirm it. Previously, industry experts had analyzed that Chrysler’s total market value exceeds US$15 billion and that FAW will never acquire Chrysler. The support of the Export-Import Bank and news of the financing of FAW listing will add new condiments to the outside world's rumors.
Although the reporter failed to get a positive reply from the Export-Import Bank of China, FAW also did not confirm the listing plan and timetable. However, during the two sessions this year, Yan Yanfeng had stated his position regarding listed rumors: “There are two growth paths for the international auto industry: one is product operation, and the other is capital operation. Both FAW Roads must go.†Clearly, Jiefang and Hongqi are FAW took the first step on the second road.
According to experts from China National Automobile Association, from the beginning of this year, the state will shift its support to state-owned enterprises. The three major groups bear the brunt of this. Currently among the three major groups, Dongfeng Assets has achieved integration through listing, except for taking up part of the full cooperation with Nissan. There is no reason to hand over money in the short term; SAIC Motor is still a local company in Shanghai although it has reorganized the SAIC Corporation. It is not a SASAC company, and SAIC Capital is strong.
At present, only FAW, the surviving Liberation and Red Flag assets have not been properly resettled. Liberation has had contact with Volvo, Man and Mercedes, but all have failed. After the cooperation between Red Flag and Mazda, it was discovered that Mazda was controlled by the shareholder Ford Group. Focus on Chang'an’s joint venture interests. Now, there is demand and space for FAW. It ranks first in the list of all state-owned auto enterprise groups going out, and it is very likely to receive the largest policy and funding tilt.
With the red flag and the liberation of the sea as an opportunity, institutional and personnel adjustments are also in progress to prepare for the next round of powerful off-shore mergers and acquisitions. According to FAW insiders, Wang Gang, currently the general manager of Tianjin FAW, is operating in Xiali and Ville. The sales and independent research and development of Weizhi and other products are outstanding, and it is expected to enter the group's management by helicopter.
Everything is ready, as long as the red flag, the liberation of the Russian project is successful, FAW will completely out of the “cold kiln†who is able to resist the loneliness and engage in independent research and development, and the acceleration is about to begin.
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