· The whole plant's global "down", local integration of parts factories - China's automobile investment and financing observation (1)

The impact is creeping in, what are our traditional businesses doing? We have been talking about the overseas strategy of Chinese car companies is an export strategy, not an international strategy. If you only sell cars, the development space abroad will become narrower and narrower. This year, Geely announced that it will invest 20 billion yuan to invest and build factories overseas. A large number of OEMs such as Great Wall, Changan, Chery and Jianghuai are also deployed in Brazil and Russia. This is also the preparation of the OEMs to deal with the domestic market. The more distressed car sales, open up new capacity to release space.

China's auto market has experienced many years of spurt development. So far, both sales volume and output have been far ahead of other countries in the world. There are more than 130 domestic automakers. After several years of expansion, the competition in the domestic market has become more and more intense. The decline of the auto market in 2015 also reflects that the domestic new car market is close to saturation.

On the other hand, local manufacturers have accumulated sufficient experience in manufacturing technology and are fully capable of participating in international competition. Mr. Xu Jinquan, CEO of China Automotive Consulting Center, said: “Compared to a single export, overseas investment and construction and mergers and acquisitions can enhance the overall competitiveness by arranging local sales channels and providing local services to obtain regional markets or advanced technologies. To enhance brand awareness, it is also more in line with the global strategy of more powerful automakers and parts factories."

Related events:
1. SAIC Group spent RMB 10 billion to establish a second plant in Thailand
2. Geely Automobile invested 150 million pounds to build a factory in the UK
3. Geely Automobile invested 250 million to invest in London taxi company
4. Geely subsidiary Mytime acquires US Miller Auto Park
5. China Aviation Industry Corporation acquired US$800 million
6. China Chemical Rubber Co., Ltd. acquired 26.2% stake in Pirelli, Italy
7. Junsheng Electronics plans to acquire 6.8 million yuan for QuinGmbH, Germany
8. Derun Electronics acquired a 60% stake in Meta-FinS.pA for 56.82 million euros...

After the rapid expansion of the automaker in 2014, the total number of investment and mergers and acquisitions in 2015 hit “ceiling”, which was basically maintained at around 29. Among them, SAIC, Changan, Beiqi, Geely and BYD are still investing heavily in 2015.

Compared with the weak growth of OEMs, local component manufacturers have shown a more active investment enthusiasm. There were 47 in 2015, a significant increase from 24 in 2014.

Xu Jinquan said: "As the car becomes more intelligent and networked in function, auto parts also show the trend of electromechanical systems from mechanical to electronic control. Automotive electronics become more value-added in auto parts and The fastest growing product."

Corresponding to this is the accelerated expansion of local auto electronics manufacturers, both Winson Electronics and Derun Electronics are eye-catching. Among them, Junsheng Electronics also laid out the BMS of the new energy power system and the CMS related to energy storage, and seized the opportunity of the new round of technology industry development.

In terms of traditional parts and components, it shows the integration of large factories. "With the increasingly fierce competition in the whole vehicle and the changes in parts and components brought about by new energy, traditional parts and components are accompanied by price reduction pressures. The ecological circle will gradually shift from foreign investment to Chinese manufacturers, and it will show a trend of concentration to local manufacturers. Xu Jinquan believes.

Related events
1. Junsheng Electronics invested RMB 20 million to establish a joint venture with Ningbo Chengtou and Nanxin
2. Chengshan Group recovered 65% stake in US Cooper Tire and established Pulin Chengshan (Shandong) Tire Co., Ltd.
3. Yongding shares 668 million into the Jinting wiring harness
4. Southern Bearings acquired RMB 76.8 million to acquire 20% equity of Pan Asia Microtransport...

At present, most of the world's well-known brand automakers have set up joint ventures in China. With the increasing importance of China's auto market and vehicle manufacturing scale in the world, the cost pressure brought by fierce market competition and the high tariffs on imported parts and components make the auto parts manufacturing to China a necessary measure to become a foreign-invested manufacturer.

Related events
1. BorgWarner built a factory in Ningbo for $36 million
2. ContiTech Transmission Systems Group successfully acquired rich tape in January this year
3. Zhengxin Rubber invested 900 million yuan to start the second phase of the project to expand production capacity
4. Faurecia and Dongfeng Motor subsidiary invested 710 million to build a joint venture
5. Vehicle plastic fuel tank giant Kauteisi Wuhan factory invested 100 million yuan in the first phase...

Author ZHOU Ling-yun Xu Yifei
This article Source China Automotive Consulting Center Network
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