Chinese car companies frequently spread overseas to “smell” core technology into overseas M&A focus

Wanxiang Group defeated Johnson Controls and successfully bid for A123. Geely Holdings was rumored to acquire Aston Mazou’s debt crisis. Under the context of a series of backgrounds, Chinese auto companies’ overseas mergers and acquisitions have become increasingly active. It is worth noting that in the world’s automobiles, In the industrial structure, the car companies targeted by China's capital this time are very different from the past—core technology has become the main “prey” of overseas acquisitions by Chinese car companies.

China's car companies frequently spread "scandals" overseas

After a series of twists and turns, on December 6th, Wanxiang Group, the largest auto parts manufacturer in China, defeated rivals such as Johnson Controls Communications, Japan NEC and Siemens Germany, and finally won A123 Systems. A123 Systems is a company specializing in the development and production of lithium-ion batteries and energy storage systems in the United States. It is a supplier to BMW, GM and other automotive companies.

According to Reuters, the Wanxiang Group’s bid for the assets of battery supplier A123 Systems has been approved by the US court on the 11th. This means that Wanxiang Group, which basically completed the acquisition of A123 Systems, will not only be able to acquire more advanced battery and new energy technologies in the future, it will also increase its product competitiveness, and it will also be able to expand Wanxiang Group’s sales share in the US market.

At the same time, in the other two rumors about the restructuring of overseas car companies, Chinese car companies also appeared. On December 7, the "Wall Street Journal" reported that the American electric car manufacturer Fisco Motors will first consider seeking investors or buyers from China or Europe because the company executives think that these two regions are developing electric vehicles. The interest exceeds that of the United States. For potential collaborators, Fisker will provide a battery-powered car design that has been developed for more than $1 billion in R&D costs. However, Fisker subsequently denied the possibility of being sold out and bankruptcy, but stressed the intention to find partners.

If the above "smell" is still wishful thinking, in the process of the sale of British sports car brand Aston Martin, the figure of Chinese car companies is clearly clear. It is reported that Geely Group is negotiating with Aston Martin and wants to acquire it, and the whole process will adopt the same model as the acquisition of Volvo.

However, on December 11, the news that Aston Martin's bid was closed, "Geely did report for the bid, but in the end the Italian private equity fund took a share and Geely has already left." Finally, Italian private equity The fund InvestIndustrial Co., Ltd. and Aston Martin have reached an equity purchase agreement, the former will acquire a 37.5% stake in the latter, about 190 million euros.

“Chinese auto companies have been active again in overseas M&A activities and both internal and external reasons exist.” Zhongshi, an auto analyst, told Nandu reporters. On the one hand, the European car companies, trapped in the quagmire of the sluggish market, hope that the need to rescue themselves from difficulties through the introduction of capital or restructuring will become increasingly strong. Although the US auto market has recovered, but due to the expected uncertainty in the return of investment by new energy auto project investors, it is also looking for the takeover.

On the other hand, although China's auto market has slowed down this year, it still has a huge bottoming effect as the world's largest auto market, providing space and opportunities for overseas mergers and acquisitions. At the same time, in recent years, domestic auto companies have gradually realized that the lack of skills caused by the lack of accumulated technology in the past made it possible to increase the impulse to acquire corresponding technologies through mergers and acquisitions of overseas car companies.

Zhong Shi said that China’s hometown, the world’s largest auto market, will inevitably become a must for international car companies. However, Chinese auto makers, which lack their own system competitiveness, will become bigger and stronger through overseas mergers and acquisitions, enhance their competitiveness, and will continue to have their own place in the future market.

Diversification of overseas mergers and acquisitions gradually emerged

On December 10, Zhejiang Geely Holding Group issued an announcement stating that it has signed three technical cooperation agreements with Volvo Cars. According to the agreement, the two sides will include air quality safety in the vehicle, medium-sized car platforms including small green engines for energy saving and environmental protection, and electrification of automobiles. The parties launched comprehensive cooperation.

Recently, Geely Panda and Emgrand EC7 and other products reached the C-NCAP five-star collision standard in China. Yang Xueliang said that this benefited from Geely Automobile's good reference to the safety gene of Volvo Cars.

Through the acquisition of Australia's DSI, Geely has the core technological capabilities for the development and production of automatic transmissions, which greatly increase its product competitiveness. Geely Group Vice President and General Manager of Geely Automobile Sales Company Liu Jinliang told Nandu that next year Geely will fully carry the Australian DSI6 automatic transmission products to the market. “There are less than 10 products that use automatic transmissions in the current independent brand models. %, Geely used DSI automatic transmission to pull down the price of similar products, while promoting Geely's sales and profit growth, "Liu Jinliang said.

In December 2009, BAIC acquired Saab’s core technology assets for US$200 million, including three vehicle platforms: EPSilon, GM2900, and GM2400; two series of turbocharged engines and two transmissions. At this year's Guangzhou Auto Show, Beiqi's own brand of high-end vehicles digesting and absorbing Saab technology was finally unveiled, and the utility of the acquisition was immediate.

Core Technology Becomes Overseas M&A Focus

At the end of September this year, Dongfeng Motor Company announced that it had begun to acquire Sweden’s T Engineering Company and established its first overseas R&D base. According to the basic agreement signed between the two parties on December 8 last year, Dongfeng Motor will first acquire 70% of the shares of T Engineering, and the remaining 30% will be completed within the next two years.

Zhu Fushou, general manager of Dongfeng Motor Company, stated that Dongfeng’s overseas mergers and acquisitions are trying to use international resources to introduce, digest and absorb key technology assemblies, and gradually cultivate Dongfeng’s own core talents and technologies.

Although holding capital, domestic car companies that feel increasingly competitive pressure have apparently become more pragmatic when it comes to overseas acquisitions. If the acquisition target is a brand, companies need immediate access to intellectual property and engineering knowledge. In the acquisition of parts and components, it is necessary to obtain the latest intellectual property rights, as well as manufacturing and development capabilities, and apply them quickly to vehicles in China.

With the acquisition of core technologies by Chinese auto companies and their initial success, multinational auto giants have begun to be vigilant and to curb the development of Chinese auto companies and eliminate technology leakage.

However, it is worth noting that the acquisition of core technologies through mergers and acquisitions has the advantage of rapid technological upgrading and the rapid formation of scale. However, it is difficult to integrate.

Consultant Kearney pointed out that Chinese companies must effectively integrate acquisitions of overseas car companies. In addition to establishing a capital-holding relationship, shareholders need to reengineer foreign acquired companies in terms of their corporate vision and values ​​in order to share their values ​​and strategic ambitions. The infiltration and indoctrination of the acquired company are conducive to integrated management, and it also benefits the subsidiary and the parent company to work toward a common strategic goal.