A wave of tri-fold Dongfeng reorganization blessing steam and then out of variables
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Although the rumors about the Dongfeng Group’s integration with Fuqi Group have been heard for a long time, the details of the reorganization between the two parties have always been “still in full glory†and the time for the two parties to sign the agreement “has not come out.â€
“Dongfeng's restructuring of Fuqi is a twist on the twists and turns, because the middle relationship is too complicated. It involves multiple interests in the equity and different partners. In addition to state-owned and private enterprises, there are two Taiwanese companies.†According to one person, it is close to Fuqi. According to informed sources from the Group, the Dongfeng Group has already reached a preliminary agreement on the reorganization of Fuzhou Automobile Co., Ltd. However, due to the fact that the Taiwanese capital companies Yulon Motors and China Motors still have details “negotiating†on the reorganization, the signing time Delayed again and again.
Full re-integration
According to media reports, Dongfeng Motor Group and Fuqi Group planned to formally sign the contract on September 17 after both sides held the company strategic cooperation framework agreement at the end of August. However, the signing of the agreement between the two parties did not take place as expected by all parties.
Regarding the temporary cancellation of the signing ceremony and the new changes in the details of cooperation between the two parties, Dongfeng and Fuqi related parties refused to disclose more information.
“There is no definitive information yet.†A few days ago, the relevant person in charge of the Dongfeng Motor Group stated that the specific time for signing the agreement between the two parties was “not confirmed for the time beingâ€; and the reporter has repeatedly called Lim Xiaoqiang, chairman of the Fuqi Group, and the other party stated that they are meeting. Inconvenient calls have never been a positive response to reorganization-related issues.
Previously, people in the industry speculated that the scope of this cooperation between Dongfeng and Fuqi was mainly aimed at the passenger vehicle business dominated by Southeast Automotive, while commercial vehicles and other business segments would not be involved for the time being. In the future, Fuqi Group will achieve the separation of assets. The passenger vehicle business is classified as Dongfeng's “autonomyâ€, while its passenger vehicles, light trucks and parts and components business continues to be controlled by Fuqi Group.
However, according to people familiar with the matter, the Dongfeng reorganization of Fuqi was not "half-swallowing," but "taking a whole and reintegrating it."
The person familiar with the matter told the reporter that the main intention and goal of Dongfeng’s restructuring of Fuqi is to restructure the entire vehicle structure of Fuqi Group. At present, the two parties have reached a preliminary framework for the reorganization method, the proportion of both parties’ equity, and the organizational structure, etc. Near the end, "only involved in too many relationships, some shareholders have not yet negotiated benefits," and signing the contract is only a matter of time.
Equity relationship complex
Although the industry generally believes that reorganization of Fufeng by Dongfeng has been a “stuck†matter, the complicated equity relationship may become a hurdle for this reorganization, and it is also related to whether the “love†of both parties in the future can “achieve a positive resultâ€. The key lies.
In fact, the complex internal equity of Fuqi Group has been considered as one of the major obstacles to its development. In particular, its main business, Southeast Automotive, is owned by Fuqi, Mitsubishi and “Zhonghua†with shares of 50%, 25% and 25%, respectively. Due to the dispersion of equity, it is difficult to coordinate the interests. In recent years, Mitsubishi Motors and China Mobile's parent company Yulon Group have lost patience. Mitsubishi Rayon and Guangzhou Automobile have set up Guangqi Mitsubishi, and Yulon has also established Dongfeng Yulon with Dongfeng Motor.
At present, Fuqi Group’s lower-level auto companies mainly include: Southeast Automotive, Fujian Daimler, Xiamen Golden Dragon Automotive Group, Xin Fuda, which is based on buses and pick-up trucks, and the new Longma under construction, involving cars, MPVs, mini-vehicles, large and medium-sized passenger cars, and parts and components, etc., and the shareholders involved include Mitsubishi Motors, Daimler, Taiwan’s “China Motorsâ€, and the Longyan City Government directly funded by the government. Among them, Yulon Motors and China Motors from the Taiwan region all belong to the Yulon Group.
Earlier media reports said that in accordance with Dongfeng plan, will fully reorganize the Fuqi, and the ownership of Fuqi Automobile must exceed 50%, but the Fujian Provincial Government is not willing to “control†the control of Fuqi, and only hopes that the Fu 40% of the shares in the steam are transferred to Dongfeng. It is also this contradiction that has become the biggest variable in this reorganization.
With regard to the issues such as the share ratio of the two parties in the restructuring, Dongfeng Group and Fuqi Group are still tight-lipped, and the above-mentioned insiders also stated that “the ratio of the two parties cannot be knownâ€.
In fact, Fuqi Group has always been inclined to capital operation. The automotive sector entity has not become as big as other provinces. Since the overall auto market in China has declined and entered the adjustment period, the performance of Fuqi Group has not been satisfactory.
In 2011, Fuzhou Automobile Group produced and sold 123,000 vehicles and 123,000 vehicles, which was a year-on-year decrease of 6.9% and 6.1% respectively. Sales revenue was approximately 11.5 billion yuan, a decrease of 6.0%. In the first 8 months of this year, except for Xiamen Jinlong's production and sales volume, the ownership of Fuqi Group's property companies showed a positive growth, while most of the other products' marketing trends were low and the market pressure was extremely high.
Helping Dongfeng “autonomyâ€
The reorganization of Fuqi will not only allow Dongfeng to have an export strategic base in the southeastern coastal areas, but also the Dongfeng Auto's own-brand sedan and the newly launched new Longma mini-vehicle project, both of which will be Dongfeng’s “great autonomy strategyâ€. Bring effective business increments.
In December last year, Dongfeng Motor released a medium-term plan named “Dry D300â€, which has thrown its own brand to achieve a production and sales target of 3 million units within five years. In addition to announcing the pace of “grand autonomyâ€, Dongfeng’s overseas market strategic layout has also accelerated.
Undoubtedly, in Dongfeng's plan, "grand autonomy" in the next five years will become a "top priority" for its development. However, although Dongfeng Fengshen, Dongfeng Yulon, Dongfeng Nissan Kai Chen, and Dongfeng Honda Siming have already provided support for the four brands, Dongfeng has to complete the production and sales target of 2 million units in 2015 in the current era in which auto brands enter the micro-growth era. There is no doubt that there is no small challenge. In addition, in Dongfeng’s overseas strategy, the goal of achieving exports of 300,000 vehicles by 2016 is also inseparable from the contribution of independent brands.
Industry commentator Sun Xiaohong believes that in recent years, car companies have considered exporting overseas as an important part of their own brand development. However, Dongfeng headquarters is located in Wuhan, Hubei Province and belongs to an inland-type enterprise. Therefore, it is necessary to build an internationalization target around the future. Dongfeng's acquisition of Fugas will become one of the important layouts of its export business strategy. The integration of Fuqi Auto's Southeast Motors and the promotion of a "great autonomy strategy" are its most important goals.
However, according to the informed sources mentioned above, in addition to Southeastern Auto, the new Longma expansion project, which was just approved by the National Development and Reform Commission in August, is expected to be put into production by the end of September. It will mainly produce micro-cars and engines, and the passenger car project will also It has already been put on the agenda. In addition, two coach companies, Xiamen Golden Dragon and Xiamen Golden Brigade, under the Xiamen Golden Dragon Motor Group, have been preparing passenger car projects and will produce their own brand cars in the future.
“The ongoing passenger car project of the two bus companies in Xiamen can be legalized with the Dongfeng production license. In addition, the new Ryoma passenger vehicle project will be launched soon. This will complete the Dongfeng Motor’s self-reliance strategic objectives. Provide key assistance.†The person familiar with the matter said that once Dongfeng and Fuqi are reorganized, Dongfeng will provide more and better resources to Fugas, prompting rapid expansion in the field of passenger vehicles, commercial vehicles and parts and components. At the same time, Fuqi is located in the economically developed areas on the southeast coast of China. Its superior West Sea location is conducive to Dongfeng Motor’s expansion in the east and west, and its export strategy.