Auto Parts giant metamorphosis

The reality and potential of the Chinese market make it impossible for the international auto giants to resist, and the effect of the supply chain transmission has given spare parts companies an opportunity. ASIMCO, which is a state-owned FAW Sihuan, privately owned Wanxiang, and foreign investment, is evolving into a trend by integrating the international auto parts supply chain in different forms.


Although not unexpected, the Chinese auto market in 2003 was daunting.

The growth of Chinese auto sales since last year has caused the international auto tyrants, Mercedes-Benz and Volvo, who have always made a stance on the Chinese market to suddenly end the wait-and-see period. Large-scale investment in rapid follow-up will push the nerves of all automakers into the market. Highly intense band. At the end of September, the Dongfeng "move capital" Wuhan's grand event once again affected the market's attention.

In accordance with the "supply chain follow" manufacturing principles, Chinese auto parts companies have also begun to flourish. A prominent phenomenon is that overseas mergers and acquisitions and expansion and development are becoming a common consensus among companies, no matter how different their past experiences are. As the state-owned, privately-owned and foreign-funded representatives of FAW Sihuan, Zhejiang Wanxiang and ASIMCO, they are actively advocating this style of work.

FAW Four Rings Regenerate

Specialization, shareholding, and internationalization are the “three rings” that have been completed during the transformation of the four-ring state of FAW from the state-owned enterprises. The next most important “one link” is to truly integrate into the international auto parts supply chain.

In July, VW Group announced in Changchun that it will invest 6 billion euros in China in the next five years. Among them, FAW-Volkswagen took the first single 1.3 billion euros of investment, equivalent to "rebuilding a FAW-Volkswagen." As FAW-Volkswagen's main spare parts supplier FAW Sihuan, this market pie falling from the sky is not far off.

This is the market. Wang Yong, General Manager of FAW Sihuan, apparently has adapted to this. Now his tenet is: “Actively exploring the international market and effectively participating in international competition and cooperation can ensure that companies are in an invincible position in a global market environment.”

This is already a big change for a component company that has been born out of FAW Group.

The separation and independence of FAW Group, a large-scale state-owned enterprise sample, is the first step for Changchun FAW Sihuan Co., Ltd. to move toward a modern professional parts and components company. After the flag was changed, FAW Sihuan gradually developed into a professional automotive parts manufacturer. The company employs more than 5,100 people, and has 7 companies and 2 research institutes under its jurisdiction. It can provide car manufacturers with products such as trunk assemblies, wheel assemblies, and car guardrails, totaling more than 1,300 kinds.

The positioning of FAW Sihuan to itself is: High-tech listed companies that use auto parts as their core products. The reform of the joint-stock system became the only way for the FAW Fourth Ring. FAW Sihuan Automobile Co., Ltd. officially operated in June 1993 and was the first "share-holding experimental field" of FAW Group.

In early 1996, the country announced new stock quotas. The positive activity of FAW Sihuan, which had a good relationship with the Changchun City Bureau of Restructuring at that time, finally won a quota of 15.5 million shares. FAW Group bundled the assets of the guardrail plant, car box plant, and variant depot at the time and was listed on the Shanghai Stock Exchange on August 26.

In 1993, the total assets of FAW Sihuan was 94 million yuan. It went public and rose to 1.361 billion yuan in 2001. At present, the share capital of FAW Fourth Ring reached 217 million yuan.

Restructuring the listing is the beginning of this company's capital expansion and resource integration.

On April 13, 2000, FAW Sihuan's Board of Directors passed the assets restructuring proposal and replaced the fixed assets of FAW Group's car box plant with FAW Fourth Ring Farmers' Market. In March 2002, FAW Sihuan took part of the assets of the FAW Group Body Factory.

In March 2002, Asia’s largest single-unit spare parts warehouse logistics center was officially launched, and FAW Sihuan Group spent RMB 170 million for this purpose. This is considered to be an important measure for improving the management level and competitiveness of FAW Fourth Ring.

After joining the WTO, China's auto industry urgently needs to integrate into the global industrial chain. Wang Yongming said: “In the competition with other domestic enterprises, since FAW Sihuan has the capital and scale advantages, it should carefully study how to turn it into a stepping stone for the international market.”

In the past two years, FAW Sihuan has successively launched a series of mergers and joint ventures overseas.

In April 2002, FAW Sihuan invested 246 million yuan to acquire a Chinese-foreign joint venture Changchun Fu Ao Johnson Controls Automotive Trim Co., Ltd. Fuao Johnson Company was established by Fuao Company and Johnson Controls in 2001. It mainly produces matching products for FAW Group, FAW Car, and FAW-Volkswagen.

On the face of it, the capital operation at the doorstep of the home is actually serving the global strategy of FAW Fourth Ring. Fu Ao Company is a wholly-owned auto parts company of FAW Group. The United States, Johnson Controls International Co., Ltd. is one of the world's major automotive interiors suppliers, has more than 110 years of history, and has a relatively technical, product, market, etc. Strong competitive advantage and profitability ranked 287 among Fortune 500 companies. The company’s Automotive Components Division is the world’s largest independent supplier of automotive seats and components. Through cooperation with Johnson Controls, FAW Sihuan can make full use of each other's international procurement network and distribution network to expand overseas markets.

Subsequently, the pace of overseas alliances of FAW Sihuan was significantly accelerated.

At the end of last year, FAW Sihuan reached an agreement with German Manhusell Filters Co., Ltd. to establish a joint venture to establish Changchun Manhussselfoo Filter Co., Ltd. The newly established company is located in the Economic Development Zone of Changchun City with a total investment of US$24.61 million. It is estimated that it will produce 8 million filters each year.

Manhussel Filter Co., Ltd. was established in 1941 and is currently one of the world's largest filter specialists. So far, the company has 38 factories all over the world and is a partner of famous automobile manufacturers such as Mercedes-Benz, BMW, Toyota, Volkswagen, and Audi.

On April 8 this year, FAW Sihuan also signed an agreement with Japan’s Takashimaya Nissho Industry Co., Ltd., Yale Co., Ltd., and Toyota Textile Co., Ltd. to form Tianjin Intime Automotive Trim Co., Ltd., with a total investment of 2080. Ten thousand U.S. dollars. Several Japanese companies participating in this project are Japanese and world-renowned auto parts manufacturers, among which the products of Yarak Co., Ltd. have been sold to more than 150 countries in the world.

FAW Sihuan said in the announcement that the newly established Yingtai Company will mainly produce internationally advanced mid- to high-end Toyota sedan accessories, adopt new technologies and materials, and conduct production in full compliance with Toyota's technical quality standards, which will have higher levels at home and abroad. The competitiveness. After fully meeting the design capacity in 2005, it will further promote the production and sales of FAW Sihuan auto parts.

These actions are gradually pushing FAW Sihuan into the mainstream of the international supply chain. But whether it can gain a foothold in it and occupy an important position is still difficult to judge.

ASIMCO Integration

The integration of China’s low-cost and U.S. personal connections is a unique effort made by ASIMCO, which has spent a decade in China’s auto parts market.

In 1994, Polish immigrant Jack Turkovsky gave up the glorious future of the head of the old Wall Street company Paine Weber's investment banking department and traveled thousands of miles to China. He founded the Asian Strategic Investment Corporation (ASIMCO) in Beijing to prepare gold for auto parts manufacturing in China.

His logic is simple: China and the United States have similar territories and similar land area. Since the vast territory has created the developed American automobile industry, similar stories will soon be opened in China. At that time, China had restrictions on investing in whole vehicles, and it was very favorable to the parts and components industry. Jack decided that this gap in the same chain was exactly what he was looking for.

The rapid start of China’s auto industry has finally returned Jack’s strategic vision for a decade. Today, ASIMCO has gained control of more than a dozen domestic parts manufacturing plants and has eight major manufacturing facilities in China. The main products include diesel fuel injection systems, brake products, electronic products, engine parts and foundry products. Domestic annual sales are between RMB 1.6 to RMB 1.7 billion. ASIMCO’s larger goal is to convert overseas sales from the current 200 million U.S. dollars to 1 billion U.S. dollars in the next few years.

“To achieve the goal, we must strive to export,” said Huang Jian, director of public and government affairs at ASIMCO.

The implication of "effort export" is to enable ASIMCO to integrate into the global supply chain of multinational corporations as deeply as possible. But it is easier to squeeze into the already well-run supply chain. The selection of suppliers by multinational auto groups or component giants is almost harsh, and the audits of one supplier range from as little as six months to as many as several years. Once the supply relationship is established, the cooperation between the two parties will be fairly stable and unlikely to be withdrawn easily. For China's parts and components companies, to enter this circle, quality is the first pass that is difficult to break through.

However, ASIMCO still found a breakthrough.

ASIMCO acquired plants that are one of the best in their respective fields. For example, oil pumps in diesel engines for heavy-duty trucks are at the leading level in China, but compared with international advanced technology, ASIMCO considers itself to be “a difference of at least 10 times”. .

Since it cannot be pumped into the international supply chain for the time being, it will not consider exporting the oil pump and instead consider an axis in the pump. "If we can supply an overseas customer with an axis and let him fit into his pump, and this pump is installed in someone else's engine, this shows that we have successfully taken the first step and we have reached the end of the chain. This is like a pagoda, the engine is the first layer, we can not get up, then we first on the second floor, as the engine parts supplier." This is a small axis philosophy ASIMCO.

ASIMCO called this first step “it is a good thing for manufacturers who are at the edge of the supply chain to come in contact with it”.

Followed by the chain effect, although you may lack some of the technology when producing things, but because you need to produce, international customers may provide some technology for free or for a fee, and then you can enter little by little; Can only do small parts, but do a small part can talk about large parts, then small parts, large parts; may also only become a wait supplier, start small-scale production, and then large quantities, and finally become the first supply Business, if you don't supply him, his car won't make it.

A car consists of tens of thousands of parts. Components are small integrated parts. From large parts to small parts to parts, the whole vehicle supplier corresponds to the first-tier supplier, and the first-level supplier has two or three-level suppliers.

This is a chain, and the lower the technical content the closer to the bottom of the chain, the easier it can be processed and manufactured. But at the same time, it is also an interlocking chain. Once it has entered, no matter which level it is from, it will begin to be accepted by this circle. ASIMCO used this to successfully take the export road.

In April this year, ASIMCO completed the merger and acquisition of the Federal Motor Company's camshaft business. This is an important step in ASIMCO's strategy. Compared to the processing of human beings, they are incorporated into the systems of others. Overseas acquisitions are definitely a shortcut. Federal-Mogul’s camshafts are supplied directly to major carmakers in the United States, including GM and Ford. Later, because the cost bureau was high and bankrupt, ASIMCO entered the company and stepped into the supply chain of GM and Ford.

ASIMCO CEO Jack said: "This merger is a very successful strategic step. It matches the operation of our existing engine components in China, and at the same time enables ASIMCO to grow its business in the US host market. We believe this It is a unique opportunity to successfully enter the U.S. market, and it also provides the Chinese market with camshaft technology that is in sync with the world's advanced level."

Luo Xi, President of ASIMCO Camshaft Co., Ltd. said: "The merger and acquisition not only keeps our products competitive, but also provides a channel for expanding global camshaft market share." The company's products include steel camshafts, cast iron camshafts and powders. Metallurgical combined camshafts, of which the powder metallurgy combined camshaft technology is provided by the Japanese piston ring company. Japan Piston Ring Corporation is Japan's first-class engine parts manufacturer. After the completion of the merger and acquisition, the technical cooperation between the two parties will be continued.

But shortcuts are also risky. If you do not want to follow the example of Federal-Mogul's high cost and bankruptcy after the merger, ASIMCO must solve the cost problem and play its unique advantages. Jack's approach is to move the camshaft factory to China step by step.

The current situation is that if international OEMs build cars in China, they will find it difficult to find a good supplier of camshafts in China and would rather import them. However, localization of automobile production is the trend, so ASIMCO intends to produce such camshafts in China. As for the method, Huang Jian revealed that it may be to find the manufacturers with good management standards to talk about cooperation, and ASIMCO provided the technology, plus good management support.

He believes that this is the best way to enter the global supply chain: "We will be able to make camshafts that will be recognized by American car dealers in China one day. It is possible for people to buy your products in China. This is truly localized. And Chinese companies also need foreign companies to provide technology and management."

ASIMCO expressed that it will also increase overseas mergers and acquisitions in the future.

ASIMCO often obtains processing contracts from overseas manufacturers who are eager to reduce costs. Jack is convinced that exports will grow, as more auto parts companies will transfer low-margin parts to China to produce, and some auto makers will also buy parts from China to save money. The identity of an independent supplier enables ASIMCO to have a unique advantage in providing its customers with parts and components that meet international quality standards at a very low cost.

ASIMCO is not affiliated with any automotive group. Many of its factories across the country are located in less-developed inland provinces with relatively cheap labor, raw materials, and hydropower. This is attractive to overseas customers who want to save costs. After they handed over some labor-intensive and low-tech products to ASIMCO, even if they add road transport, the cost savings are still very considerable. For some products that require technology but are not sophisticated, ASIMCO frequently invites overseas customers to send experts to review and guide them until they are satisfied with the customer's satisfaction and then mass-produce them.

ASIMCO's domestic customers without the background of the entire vehicle group are completely in the mainstream array, including the major engine production plants and large groups such as FAW, Second Automobile and SAIC. ASIMCO said that it is based on good quality and good technology. At the same time the price is cheaper."

ASIMCO believes that in the supply chain state, suppliers fight for management, quality, speed and technology, while independent suppliers have the most impact. Because the competition in the domestic market is becoming more and more intense and the degree of integration with the international community is getting higher and higher, who can save costs and who will be able to supply it, it does not need the relationship and background.

This point can also be seen from the evolution of the role of internationally renowned component manufacturers. Visteon turned out to be a Ford supplier and later came out of the company. Delphi was part of General Motors and independent. From the original family into two links of a chain, this is a major trend.

ASIMCO is not afraid to compete with existing strong opponents. There are many ways that ASIMCO can squeeze into the solid supply chain of others. Although it is difficult, it is convinced of its own ability to drill.



The rise of universality

Zhejiang Wanxiang has grown from a grassroots enterprise to the leading domestic auto parts industry, and has squeezed into the first-class game circle of the international industry. This sample enterprise, which has steadily climbed on the global supply chain, points out a structural upgrade for many domestic manufacturing companies. Can be used for reference.

On July 9, 2003, the National Bureau of Statistics issued a list of 1,588 large-scale industrial enterprises classified by new standards. Wanxiang Group's sales revenue was 11.8 billion yuan and total assets of 11.2 billion yuan, ranking among the top 50 companies. 45th place.

On the afternoon of June 20, 2002, at the podium of the China-Europe International Business School in Pudong, Shanghai, Lu Guanqiu presented two hundreds of guests with information photographs of the cooperation between Wanxiang and the American Scheler Company. One was in 1984. Scheler took pictures of Wanxiang's first historic order, and the other was a shot taken by Wanxiang to acquire Scheler's handover ceremony after 16 years. The vicissitudes of the fate of the market are all condensed into these two films.

Wanxiang Group was founded in 1969 and has achieved continuous and stable development for more than 30 years. It is summarized in one sentence by Lu Guanqiu, that is, “fight for zero for ten years”.

In the 1970s, the company made a profit of 10,000 yuan a day, and the highest annual income of employees was 10,000 yuan. In the 1980s, the company made a profit of 100,000 yuan a day, and the highest annual income of employees was 100,000 yuan. In the 1990s, the company made a daily profit of 100 yuan. Ten thousand yuan, the highest annual income of employees exceeds 1 million yuan. In 2001, the company made a profit of 3 million yuan a day, and the highest annual income of employees was 3.03 million yuan.

In the late 1970s and early 1980s, Lu Guanqiu changed the pattern of production of various products in the past, and he pushed the gimbal. In the autumn of 1980, there was a thing that still made the old employees happy. On that day, Lu Guanqiu sent a 430,000 yuan substandard universal joint to the waste collection station in front of the entire factory staff. This dedication to product quality has enabled Wanxiang to win the favor of Schoeller, the third-largest component company in the United States.

One day in March 1984, Lu Guanqi accidentally received a call from Beijing Zhongqi Corporation. A U.S. businessman called Doyle will go to Wanxiang to investigate. Doyle was at the time the United States Scheele Company's Asia Distribution Department, has always been known for its harsh products. But on the afternoon of the first visit to Wanxiang, he left 30,000 sets of orders for the joints. Lu Guanqiu later learned that in fact, in the Canton Fair in previous years, Doyle had a product with a universal goal. Every year, he must buy back some research. Prior to Doyle's arrival, Scheler had already recognized this partner. In August 1984, Wanxiang’s first batch of 30,000 sets of universal joints set off from the United States. This is the first time that Chinese auto parts have been sold to the United States.

The cooperation with Scheler has not been easy. In 1987, Scheele's boss made a special trip to Wanxiang and raised the exclusive rights of the product. Lu Guanqiu knows that this move will control the universal product market and limit the scale of development. There is no agreement. Scheler's boss broke off with an enthusiasm and gave Wanxiang a hard time.

At that time, the main channel for the export of millions was held by Scheler. There were signs of Scheler in workshops and warehouses, and there were piles of products specifically produced for them. A large amount of money was accumulated. Lu Guanqiu bite his teeth to open up the market. After a whole year, Wanxiang finally passed through the most difficult period. Then Scheele’s boss returned. They could not find such cheap products in other countries. They had to re-sign the contract with Wanxiang. Schoeller also sent an Eagle Eagle to Lu Guanqiu to pay tribute.

The situation that followed was fundamentally changed, and everything was going on. Scheler went from bad to worse. In April 2000, Wanxiang finally negotiated the acquisition of the most-patented patent company in the world, which was established in 1923. On April 25th, those who sent Eagle Eagles came to Wanxiang for technical transfer. When Lu Guanqiu shakes hands with him again, he said that you are the winner; Lu said that we cooperate again.

In the face of globalization, Lu Guanqiu adopted a strategy of externalizing resources. In his view, the development of the enterprise depends to a large extent on the level of rational use of resources and the degree of optimal allocation.

In 1994, Wanxiang Qianchao’s shares were listed on the Shenzhen Stock Exchange, setting a precedent for private companies to list in different places. In the same year, the Group established a wholly-owned American company in the United States. Wanxiang used the “equity swap market” to exchange equipment. The market has established 18 companies in seven countries including the United States, the United Kingdom, Germany, and Canada, with the operating skills of "taking profits for market changes" and "intangible asset acquisition" and other capital operations and development industries.

These steps not only make Wanxiang a firm foothold in the global supply chain, but also drive it to climb step by step, and all the way into the game circle of the industry's first-rate players. In August 1997, General Motors of the United States formally signed a supply contract with Wanxiang.

On August 28, 2001, Wanxiang successfully completed the acquisition of UAI, a Nasdaq-listed company in the United States, which pushed it to the front of the internationalization of the auto parts supply chain.

There are two major pieces of Wanxiang’s current work, one is overseas bases centered on Wanxiang Overseas Company; the other is domestic property rights companies.

Wanxiang Overseas has been focusing on its own business for a few years. In recent years, it has been a simple capital operation, mainly based on acquisitions. In 2002, the company invested in five projects such as DET, and added the qualifications of nine multinational companies such as Lockford.

In China, Wanxiang Group added eight host plants and parts and components cooperation such as Hainan Mazda, SAIC Anhui Chery, and Jiangxi Changfei Automobile; the established electric vehicle development center established Zhejiang Wanxiang Power through the acquisition of Aettek Battery Industrial Company. The battery development company promotes the integrated supply chain strategy process of battery-motor-electronic control-electric vehicle.

Everything seems to imply that Lu Guanqiu will develop into automobile manufacturing. As the boss of auto parts, Lu Guanqiu is not eager to realize his dream of a car. He believes that to seize the adjustment of the international industrial structure and find its own position in the market's re-division, it is most important how much capacity there is to do. "In the auto parts industry, we want to start a car immediately. How easy is it? The most important task of Wanxiang is to do a good job of its existing work. On the one hand, it expands the domestic production base; on the other hand, it Integration of resources."

In accordance with Lu Guanqiu's 10 years of zero planning, Lu Guanqiu's dream of a complete vehicle, the chain from upstream to downstream has 10 years. In the automotive industry chain, it is the long-term path to universal development that the camp is moving from zero to a whole step, expanding the scope of industrial investment, and seeking cross-industry and cross-border development.

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