Recently, reports quoted from SASAC sources have asked the domestic manufacturing and financial industry to suspend overseas mergers and acquisitions, waiting for a better time, because global asset prices will continue to decline. Unless the company can prove that the transaction is of strategic importance, the government will not approve overseas acquisitions by domestic automakers and banks for some time. Under the impact of the global financial turmoil, valuations of corporate assets in various countries have shrunk dramatically, making it impossible for the previously unapproachable targets to be acquired. The Chinese auto industry's recent acquisition scandal has continued, but it has always been "thunder and rain". A series of facts show that the merger and acquisition of overseas assets by the Chinese auto industry has not yet become a trend. The process is far more complicated than it seems. A few days ago, the SASAC reminded manufacturing and financial companies to suspend overseas mergers and acquisitions, making it harder for large-scale mergers and acquisitions. Chinese car companies sharpen the knife Affected by the U.S. financial crisis, the automobile markets in developed countries such as Europe, America and Japan have experienced a sharp decline. The multinational giants that had once been on the global market have fallen into trouble because they have had no time to adjust. The most typical of these are American General Motors and Chrysler. They are still struggling to survive. The depressed automotive consumer market will cause global, especially American, European and Japanese auto companies to face further production cuts and layoffs. With the rapid growth of China's economic strength, coupled with the relatively small impact of the financial crisis, and the rapid increase in the status of China’s auto market—China’s leap in 2006 became the world’s second largest new car market after the United States. It is the imagination of all parties. Indeed, China has the world's most promising automotive market. At the same time, the vast majority of Chinese companies still have too weak a technology base. These reasons are enough to convince all parties that China is the best bidder. In the past two years, Chinese capital has frequently appeared in the international market. According to statistics, since February 2009, cross-border mergers and acquisitions by Chinese companies accounted for 90% of the total purchases as of February 17, up 10% from the fourth quarter of last year. M&A negative materials are more than successful cases Under all kinds of rumours, only one piece of information was proven to be true. On Monday, Weichai Power (000338) issued an announcement confirming its intention to acquire GM’s auto parts manufacturing plant in Strasbourg, France. Its wholly-owned subsidiary, Weichai Power (Hong Kong) International Development Co., Ltd., purchased French diesel engine and transmission manufacturer Moteurs Baudouin SA for 2.99 million euros, which fills the gap in production R&D technology of Weichai Power's high-power 16-liter and higher engine. . However, the industry is obviously disappointed with this result. It is like a garden blossoming flowers in the summer and only a small fruit in the fall. However, due to the weak technical foundation of Chinese auto companies, the main purpose of choosing M & A is often to obtain advanced overseas technology, or to obtain high-profile brands, or to obtain overseas suppliers. However, looking at the past overseas acquisitions, there are few successful cases. SAIC's overseas mergers and acquisitions also made Chinese carmakers more cautious. On the one hand, after SAIC acquired South Korea’s Ssangyong, SAIC Motors lost an estimated RMB 1 billion due to conflicts with trade union disputes and “technical leaksâ€. Eventually Ssangyong entered a reinstatement process and SAIC lost control over operations. On the other hand, SAIC acquired The assets of Rover (including those purchased from Nanjing Automobile) are currently operating less well than expected. Looking back at the world, there are few cases of real success in the history of the acquisition of auto brands. There are only a few successful cases such as Renault-Nissan Alliance and BMW's acquisition of MINI. Cases of failure abound, such as Daimler and Chrysler, BMW and Rover, Ford and Jaguar Land Rover. According to McKinsey's research data from a well-known global management consulting firm, in the past 20 years, the proportion of truly large-scale corporate mergers and acquisitions that have achieved the desired results has been less than 50%, and China’s 67% of cross-border acquisitions have not been successful. It can be seen that for many companies, how to conduct merger integration is a significant challenge. Chinese auto companies are not highly internationalized. They lack professional talents, their own management systems are not perfect, and they are unfamiliar with overseas situations. They also need to deal with new issues such as trade union forces and intellectual property rights. No wonder that most of the “going out†strategies Take advantage of prosperity, defeat and return. M&A opportunities for parts Now another new problem faced by overseas mergers and acquisitions in the automotive industry is that overseas automobile assets have shrunk dramatically, but nobody knows when it will be truly bottomed out. At present, people from all walks of life are worried about the impact of the second wave of the financial turmoil. These assets may further shrink. However, from the case of Weichai Power's acquisition of a French engine plant, the acquisition of parts and components involves a smaller scale of funds, so the risk will be smaller and it will be easier to adjust in time. Zheng Jun, an analyst at CSC Automotive, believes that overseas mergers and acquisitions cannot be deterred because of the difficulties. He said that China’s acquisition of foreign companies does not lack successful examples of small investment and large-scale mergers and acquisitions. For example, in 2007 Huaxiang invested only 3.4 million pounds in the UK’s Lawrence Interiors company, which was part of the Magna Group, and entered Cadillac in one fell swoop. , PSA Peugeot Citroën and other brands of interior supporting systems; the same year Wanxiang Group spent 25 million US dollars to acquire the United States AI company, to become a classic case of using reverse OEM to expand the US market. He believes that external mergers and acquisitions with the advantages of complementing each other's strengths are still favorable routes for Chinese auto companies to open up overseas markets and enhance their international competitiveness, while the international financial crisis provides a good opportunity for low-cost outbound mergers and acquisitions.
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