At the capital level, Weichai succeeded in the acquisition of the Torch of Hunan; at the industry level, Cummins grabbed a joint venture with Shaanxi Heavy Gas. But this is still just a beginning. Although Shaanxi Heavy Gas, one of the four gold assets under the “Tortoise Torch†of the Delong legacy, is in the spotlight, it can be seen from its grasp of its own strategy that Shaanxi Heavy Industries & Gas is winning the opportunity. In May 2004, Shaanxi Auto and MAN signed a cooperation agreement for the full introduction of MAN high-end products and heavy-duty vehicle technology, including cab, chassis, drive axle and mold manufacturing technology; In February 2005, Shaanxi Automobile Group and Cummins of the United States signed a feasibility agreement for the formation of a 50:50 joint venture engine company; In April 2005, Shaanxi Auto joined Cummins in the Shanghai International Auto Show. In May 2005, Zhang Yupu, chairman of Shaanxi Automobile Group, went to Beijing to hold a phased meeting with Cummins to discuss details of joint ventures; On June 18, 2005, Tan Xuguang, Chairman of Weichai Power, led the company's six senior officials to visit Shaanxi Heavy Duty Truck, and delivered the first Lanqing WP12 Euro III engine to Shaanxi Heavy Duty Truck for trial; On August 12, 2005, Weichai Investment, a subsidiary of Weichai Power, invested RMB 1.023 billion in a premium over 30% of the net assets of Hunan Torch, and Shaanxi Wanxiang West Development Co., Ltd. was an alternative purchaser. In August 2005, Shaanxi Wanxiang Western Development Co., Ltd., which had priority of transfer, filed a lawsuit in the court; September 16, 2005 Xi'an Cummins Engine Co., Ltd., a joint venture between Shaanxi Automobile Group Co., Ltd. and Cummins Co., Ltd., established at a ratio of 50:50, was established in Xi'an. Cummins Global Vice President Hua Jinsheng and Cummins (China) Wang Hongjie, Deputy Chairman of Capital Co., Ltd., Zhang Yupu, Chairman of Shaanxi Automobile Group Co., Ltd., and Shaanxi Heavy Industry Co., Ltd. Nie Xinyong, chairman of the Type Automobile Co., Ltd., signed a joint venture contract. According to the contract, the registered capital of the joint venture company is US$24 million, and it will produce a Cummins 11 litre fully electronically controlled diesel engine with a power range of 305 to 440 hp. The civil construction of the joint venture plant is expected to start in the fourth quarter of this year and the formal production is expected to be in the third quarter of 2006. The initial program is 20,000 units. In 2010, the joint venture’s target output was 50,000 units. ISM is the flagship product of Cummins heavy-duty truck engine series. It is the ideal power for heavy-duty vehicles with total weight ranging from 26 tons to 44 tons, including heavy-duty trucks, long-distance luxury buses and double-decker buses. The initial stage of the joint venture company will be CKD, gradually transition to SKD and eventually realize the localization of most parts and components. The chaos of China's heavy-duty truck industry has once again taken place after the three-foot truck market in China with more than 15 tons of heavy trucks. The current focus is on Shaanxi Zhongqi, one of the three major heavy-duty trucks. Has always been low-key can not stop the rush of many capital, of course, can not stop all kinds of rumors. Who allowed China's heavy truck market to achieve more than 30% growth for several consecutive years? Who makes Sha Zhongqi wearing the “15-ton heavy truck boss†and “the most profitable heavy-duty company in China� At the beginning, Xiang Torch took advantage of 500 million yuan to control Shaanxi Heavy Duty Truck and Chongqing Heavy Duty Truck. From the outsider of the whole car industry, it became the giant of the heavy truck industry. Today, Shaanxi Zhongqi Auto has been referred to by the media as a Weichai premium to acquire the Hunan Torch Stock. Final goal. In fact, as many as 26 companies, including SAIC, FAW, Dongfeng, CNHTC, Yutong, and Wanxiang, have participated in the competition for the Hunan Torch equity. Because, “Controlling the Torch, we have a heavy truck in China. The best strategic resources." In August 2005, after Weichai successfully carried out a merger that was likely to be the most compelling aspect of the domestic car industry this year, the original heavy-duty truck's clear-cut framework became subtle, and Shaanxi Heavy Gas released the first time. The statement that the acquisition has nothing to do with China National Heavy Duty Truck is full of the taste of rain. The replacement of capital brewed industrial restructuring. At this point, I am afraid that no one knows more clearly than Shaanxi Heavy Gas. After experiencing the rise, prosperity, and collapse of the Delong System, the renewed change in the Hunan Torch Group's equity did not disrupt Shaanchow's foreign joint venture and cooperation ideas, nor did it affect the formal joint venture agreement between Shaanxi Heavy Duty Truck and Cummins Inc. on September 16. Signed. As a result, not only was MAN MAN's expected, it also made people's all previous speculations become doubts. MAN failure “According to equity analysis, Shaanxi Automobile should finally be separated from Weichai. Therefore Shaanxi Automobile is still our goal, but it is not the only target. MAN certainly cannot establish a very small engine plant, basically in our target price region. The car inside cannot afford MAN's engine.†A week or so before the joint venture agreement between Shaanxi Heavy Duty and Cummins was signed, MAN China’s president Hansten also told reporters with a look of relief. Not only Hansten, after Weichai held the torch, no one would think that Cummins of the United States has the possibility of joint venture with Shaanxi Heavy. People have reason to make such inference: Weichai, which already has an annual output of 200,000 diesel engines, has been under the pressure of increasing competition, increasing risks, and eager to get rid of CNHTC. Cummins of the United States shares the largest heavy truck market cake in Weichai? This allowed MAN to see hope again. It should be said that the presence of Cummins in the United States made MAN very passive in the joint venture negotiations with Shaanxi Heavy Gas. Fully thinking that with Steyr technology platform for the past 20 years of preparation, cooperation with Shaanxi Heavy Industries and Construction Co., Ltd. is a matter of course, but Shaw Zhongqi's insistence on the engine problem makes MAN unprepared. “We will not engage in engines in Xi’an. Moreover, the vehicle project and engine project are two of our projects in China.†MAN rejected SAIC's request with a more determined and clear attitude. For the Chinese heavy truck market, which has just entered the growth period, the rigorous German MAN is not without some pride. The huge growth and potential of the heavy truck market in China and the performance of Shaanxi Zhongqi are certainly important reasons for attracting them. However, based on experience, they also know that the Chinese market is about to undergo a regular decline, and Chinese companies will soon face the expansion after production. Both the price war and the urgent need for product technology upgrades have given them reserved capital. Even if Shaw Brothers and the United States Cummins began to contact, the German MAN did not particularly care. They know that there is always bargaining in the business field. What's more, Shaanxi Zhongqi needs a comprehensive upgrade of Steyr technology, which is not what professional engine suppliers can do. MAN just wants to be half right. What it did not expect was that time is much more important for Chinese heavy truck companies than other factors. The deepening and extremely fast progress of the joint venture between Shaanxi Heavy Duty Trucks and Cummins has allowed MAN to change its original plan. They told Shaanxi Heavy Gas that the engine project can be discussed with the vehicle project. This was quickly responded to by Shaanxi Heavy Gas: "You can continue to talk. The premise is that you can accept the same conditions as Cummins." "acceptable." "We need a clear answer." ...... In the absence of a clear answer, Shaanxi Heavy Duty and Cummins signed a joint venture production feasibility agreement and “dignified their own dignity when appropriate.†"MAN's truck will never be equipped with a Cummins engine." A senior MAN company told reporters in an affirmative manner. In fact, according to the meaning of Shaanxi Heavy Gas, after Cummins, it is still necessary to seek cooperation in the entire vehicle. If the cooperation between himself and Cummins can increase MAN's understanding of the Chinese market and adjust the strategy at the right time, MAN is still a more appropriate choice. Although MAN did not give up its efforts to further cooperate with Shaanxi Heavy Gas, the clear attitude of “having no he or me and not having him†between Cummins made the cooperation between MAN and Shaanxi Auto stalemate again. With Weichai holding the torch, we have no idea what kind of ups and downs MAN has experienced in the more than one month after Shaanqi and Cummins formally signed a joint venture agreement. Although there is more than one partner in China that can be selected by Shaanxi Heavy Gas, even though the company that uses Steyr technology to produce heavy trucks is not only a company of Shaanxi Heavy Gas, it cannot be judged that MAN has given up the possibility of cooperation with Shaanxi Heavy Gas. “We have always considered MAN to be an ideal partner, and Shaanxi Heavy Duty is also a very important partner for MAN. But they have allowed us to wait too long and have disappointed us many times. MAN once engaged in an engine project in Guiyang. Later, because there was no support from the automaker, MAN hoped to have the support of the OEM in the engine project, but he did not want to put himself in a vehicle factory.†An insider of Shaanxi Heavy Duty Automobile vaguely told reporters Revealed the company's dissatisfaction with MAN and regret. He believes that MAN's problem lies in its unclear strategy. For example, MAN only knows that the Chinese market has great potential, but the timing of participation and how to participate are not clear. Just seeing that others have come before they feel that they will not come. Such as swinging around when choosing a partner. However, “we did not give up the possibility of continuing cooperation with the MAN. Once the domestic heavy truck structure is formed in the future, some things that are impossible now will become possible.†After a series of changes, and seeing the stagnation of Volvo's cooperation with China National Heavy Duty Truck, MAN wanted to "understand" a lot of things. They gave up their original plan to establish a joint venture in China and instead sought a strategy to penetrate into the Chinese market in the form of equity participation. "While not occupying 20% ​​or 50% of the shares, what we want to do is to cooperate with a powerful and potential heavyweight manufacturing company in China. We will bring our understanding of the industry, advanced technology and a series of advantages. Affecting their existing products. After 5 to 10 years, the development of the market may gradually be based on us.†Hansten’s idea did not know again and again that “we insist on independent development and autonomy based on international advanced trucks. The brand's development road. Under this premise, actively fighting for cooperation with the outside world and establishing a follow-up platform for the development of heavy trucks,†Zhang Yupu can accept. In any case, “Shaanxi Zhongqi will not have too many twists and turns on the way forward, will not Because with which company or cooperation with which company did not affect our development thinking." Looks like a moderate Zhang Yupu, his bones are unwavering. Cummings "The reason why Cummins succeeded in signing contracts with Shaanxi Heavy was that we have common values ​​and we don't exclude any third parties from each other. As an independent engine supplier, Cummins still hopes that the engines of the joint venture can supply Shaanxi Heavy Industries even if it is a joint venture with Shaanxi Auto. In addition to the domestic and international markets, CNAF also believes that the joint venture company has its independence and does not exclude selling through Cummins channels to other companies or even competitors. This is a very important reason for successful signing.†No one denied that Cummins was the biggest winner in this battle. As with the cooperation between Cummins and Dongfeng that year, it is still said that Dongfeng trucks are "Cummins trucks." Dongfeng Cummins is still the most profitable part of Dongfeng commercial vehicles. When Wang Hongjie signed on the joint venture agreement on behalf of Cummins of the United States, the plan to build another "Dongfeng Cummins" in Xi'an began. In this battle, Cummings of the United States and the German company MAN took over each other. For both parties or other multinational corporations wishing to visit China’s auto market, they have considerable experience to remember – the timing of the joint venture, the choice and determination of the partners, and whether they should seek common ground in strategy, and how to use negotiators who know more about local companies. Conducting effective negotiations, and how to grasp opportunities in exploring the Chinese market, correctly judging the situation, and comprehending each other's real ideas are flexible, neat Americans who have "wakened up" the strict and rigid German companies. The independent engine company overcame the MAN company including vehicle and engine technology. Cummins first won the strategy. As an independent engine company, Cummins is not affiliated with a vehicle group, but must find a global vehicle or a large market, the first three vehicle groups or companies to become their partners to further improve their position and expand the global market . It can be seen that the independent engine company can fully establish a closer relationship with the auto manufacturer in a more flexible way. By working with Shaanxi Heavy Duty Trucks, a true heavy-duty truck manufacturer with a market share of more than 25% in China, Cummins has found a good development platform for its ISM 11L high-horsepower engine and can produce locally in China. This is the foundation and starting point of Cummins' strategy. With 30 years of experience in China, Cummins quickly touched the "vessel" of Shaanxi Heavy Duty Truck: urgently needs to start upgrading the technology of heavy trucks from the engine, rush to localize and scale up to resolve the price gap, and use advanced assembly to form its own brand. In order to create conditions for exploring cooperation with foreign well-known heavy truck companies on new technology platforms... Cummings explained to Shaanxi Heavy Gas the persuasive reason: Cummins engines are more competitive than European engines. Cummins has built a series of engine matching systems in China with the development of the market. Xi'an Cummins can share it. Exchange rate reasons also lead to relatively cheap Cummins engine prices; Cummins has enough experience to improve the Chinese market; The engine manufacturers' unique products have a wide adaptability. Compared with the engine in the group, the heavy truck technology, which is often applied only to their own chassis, makes Shaw Heavy enough to be tempted. Then, it is very easy for both sides to form a "common value": no third party is excluded. This is related to what the media said a few months ago that “after the joint venture, most of the engines of the joint venture will only be supplied to Shaanxi Automobile. This number may reach 80% or 90% of the total production, and the rest will be sold. For other companies in need, Cummins engines will mainly supply their own partners. "There is a big difference. At the press conference, Cao Shide, Cummins' global vice president, insisted on communicating with reporters in Chinese and amused reporters and amused himself. Wang Hongjie, vice chairman of Cummins (China) Investment Co., Ltd., graduated from the Department of Electronic Engineering of Tsinghua University and has long worked in the domestic machinery industry. He has extensive practical experience in fields such as production, R&D, technological transformation, market expansion, and corporate management. The experience of Cummins Global Vice President and President of East Asia Hua Jinsheng from studying in China to work in China makes people feel that for Cummins, the localization of Chinese personnel and the localization of parts and components are equally important factors for Cummins' success. Speaking of the complexity of the heavy truck market in China, Wang Hongjie said: “We have a piece of paper and a picture of the relationship between Chinese companies.†He said that from the perspective of equity relations, the world is very complex and Renault owns Nissan. It is not surprising that Nissan owns more shares in Renault. China has only just begun. The asset relations of the major automotive groups are relatively simple. In the eyes of European heavy truck giants, Cummins sees a clear bottom. “Cummings is a Chinese company in China. For 30 years in China, Cummins’ Americans speak Chinese and local employees have a say and decision-making power. The analysis of the Chinese market is naturally more in-depth. Take products that are best suited to the Chinese market. We have a higher success rate for production and localization in China. We will also do things that many multinational corporations are unwilling to do that are conducive to environmental protection and other advanced or not very profitable investments." The reporter confirmed that at the same time as the joint venture with Shaanxi Heavy Gas, a joint venture between Cummins and Beiqi Foton Power Engine Plant is in progress. So far, Cummins's product strategy in China has begun to appear: In the 4 to 9 liters of mid-horsepower engine and medium truck sales of the largest commercial vehicle Dongfeng, in the 11 liters of high-powered engine and over 15 tons of heavy truck sales overbearing Shaanxi Automobile in hand, The light engine then grabbed the fertile market of Beiqi Foton, which occupied 1/3 of the light truck market. “The right strategy, profound understanding of the local market, rapid response, localization of personnel and spare parts,†Cummins asked several of China’s The independent engine company has seen the independent development of the independent engine supplier in the United States for 86 years. Weichai algorithm Xinhualian's Fu Jun intelligently summed up the relationship between capital and industry as follows: “Industrial management is addition, and capital operation is multiplication.†Compared with these capital operation masters, Weichai Power Chairman Tan Xuguang is also legendary and has Same domineering, ambition and huge development plan. However, unlike the capital masters who have entered the auto industry, Tan Xian’s post-industrial capital and mergers and acquisitions with the ultimate goal of industrialization have made people see the development path of an engine company that is different from Cummins. This is a major event to be expected in the Chinese automotive industry. There are many speculations surrounding Weichai's holding of the Hunan Torch. Most of them are concentrated on two points: first, the purpose of Weichai; second, whether Weichai is making a loss-making business or making money. For the first point, the argument that Weichai had to get rid of the control of CNHTC through the holding of the Hunan Torch is not controversial. The key lies in whether Weichai will strengthen the control over the supporting market of Shaanxi Heavy Gas and enter the vehicle industry. People have different opinions. An explanation from a securities analyst is one of the most objective expressions the reporter sees: Weichai Power's acquisition of the Hunan Torch is based on two considerations: First, as the asset clean-up comes to an end, the shadow of the Delong System is moving away from the torch. With the help of Huarong, the company carried out asset preservation in a timely manner and made provision for some bad debts. Although the total amount of guarantees against the current violation of the Hunan Torch still stands at 942.56 million yuan, most of it is for the internal guarantee of Hunan Torch Torch Co., Ltd., leaving little risk, and the assets have been basically consolidated. Second, the Hunan Torch has retained the four core business assets of Shaanxi Heavy Duty Truck, Fast Gear, Zhuzhou Spark Plug and Dongfeng Off-road Vehicle, and its asset quality is relatively good. Therefore, the acquisition will further expand the foundation and strength of Weichai Power in the heavy truck industry. In addition, the 2005 semi-annual report of the Hunan Torch shows that although it was affected by factors such as macro-control, weak industries, and the DeLong crisis, the company still achieved good results. In the first half of the year, its net profit was 205 million yuan, an increase of 169.92% year-on-year, and the earnings per share was 0.22. Yuan, a year-on-year increase of 175%, net assets per share of RMB1.81, an increase of 13.13% year-on-year. At the same time, the company's main business continued to expand. The Hunan Torch sales 8475 heavy trucks, an increase of 9% year-on-year; axles, transmissions, spark plugs, etc. Sales volume increased by more than 30%, spark plug sales in the country. What is of concern is that in the first quarterly report of Hexiang Torch, most of the major shareholders of tradable shares are natural persons. New institutions have emerged in the Hunan Torch Report and the market confidence of the Hunan Torch is gradually increasing. This is similar to Shaanxi Automobile's view. Fang Hongwei, general manager of Shaanxi Automobile Group, told the reporter: “Tan Xuguang’s argument is that after the successful operation of Weichai’s industrial platform, with the successful experience of the operation of Hunan Torch Capital, the use of two platforms to create an international national industrial group†Weichai hopes to make a complete industrial chain, which makes sense for Tan Xuguang to create a national brand and a national industrial flag." At the same time, Fang Hongwei denied that Weichai was making a merger for Shaanxi Heavy Duty Truck: "If it is only for Sha Zhongqi, Weichai has absolutely no need to pay such a large price. Weichai's ambition is much larger than most people think. The Torch platform has the most outstanding strategic resources of China's heavy trucks, coupled with the largest scale and strength of Weichai's heavy-duty engines in China, and I think that these are combined and there is nothing to be done. On the other hand, if these resources are Competitors took away, the harm to Weichai is very big. First of all, the acquisition is beneficial to Weichai, and secondly, there is a danger of not acquiring Weichai. These two points are the key to let Tan Xuguang decide.†There have been rumors that the board of directors had authorized Tan Xuguang to invest RMB 1.5 billion in the acquisition of the Hunan Torch. If this statement is conclusive, it can be seen that Tan's last successful acquisition of 1 billion yuan is still cheap. What's more, if it is only to grab the customer of Shaanxi Heavy Gas, then the contract between Shaanxi Heavy Duty Truck and Cummins should be the result that Weichai really does not want to see. In response, Cummings explained that "the share of indirect control of Weichai within the joint venture company is small. After the announcement of Weichai's holding of the Hunan Torch, the negotiations between Shaanxi Heavy Duty Truck and Cummins have basically ended." For the future Cummings believes that "more or less will be there, but they have confidence in handling this relationship." The information from Shaanxi Auto has reflected another kind of attitude that is said to be quite true: “In cooperation with Cummins, we informed Weichai, our strategic partner, at the initial stage. Weichai also expressed its understanding. Later, Weichai entered the party. After the torch was very positive about this project, Tan Xuguang said: 'Since Weichai has participated in this industry through equity participation, it will not only position itself as a company that builds engines. Weichai is responsible for this industry. For the development of the industry, we will do it.'" Two weeks ago, according to professional analysis, after Weichai Power obtained control of the Hunan Torch, it would mean that the heavy truck industry in China is about to undergo a major change: First, Weichai Power, Shaanxi Fast, and Shaanxi Zhongqi, the three most profitable parts and components companies, and vehicle companies will form alliances through equity forms to form complementary advantages. 2. Weichai Power has been able to build a complete heavy truck industry chain, which has enhanced the centrifugal force of China National Heavy Duty Truck Group; Third, if CNHTC does not place Volvo Malaysian engine assets into Weichai Power, Weichai Power will use the Cummins engine to be jointly upgraded with Shaanxi Heavy Gas to complete product upgrading. Fourth, the possibility of successful joint ventures between Shaanxi Heavy Duty Truck and the Cummins Engine of the United States and the German Man Company has increased. After the shareholders of the power industry enter the company, the investment risk of the Hunan Torch is basically eliminated. The follow-up investment value depends on the prosperity of the heavy truck industry and the company's heavy truck and parts and components assets: profitability of Shaanxi Fast, Shaanxi Zhongqi and Dongfeng off-road itself. . In the list of "China's top 100 auto parts enterprises in 2004" jointly issued by the China Association of Automobile Manufacturers and the National Bureau of Statistics in Changchun, Hunan Torch Automotive Group Co., Ltd. and Weifang Diesel Engine Plant ranked second and fourth respectively. The main businesses of Shaanxi Fast Gear and Shaanxi Heavy Duty Truck under the Hunan Torch Group are heavy-duty truck transmissions and heavy-duty trucks, all occupying a monopoly position in the market, and Weichai Power's main businesses are heavy-duty trucks. The engine of the cargo vehicle, the main business of the two companies are complementary, and Weichai Power will enter the main business, which will undoubtedly benefit the integration and creation of the Hunan Torch Heavy-duty Truck Industry Chain. Professionals believe that the profitability of the Hunan Torch’s assets is fluctuating due to changes in the heavy truck industry. Given the elimination of the Delong risk, the value of the Hunan Torch is basically reflected, and with the heavy truck industry stabilized, the Hunan Torch is still expected to become a comparative advantage in the automotive industry. Long-term varieties with investment value. “Automotive engines only account for about 40% of Weichai, which accounts for nearly 20% of Shaanxi Weichai. Therefore, it does not represent Cummins’ selection of Cummins, and the volume of Weichai engines will be reduced. The purpose of Shaanxi Heavy Gas Selecting Cummins is to quickly make up for Heavy-duty trucks have shortages of engines in domestic and foreign markets and in special market development." Putting the viewpoint that there was no conflict between Weichai and Cummins, which has been repeatedly emphasized by Shaanxi Heavy Duty Trucks, from the capital point of view, Weichai entered the industry and then failed. The biggest difference in capital operation cases is that we are good at doing industry as Weichai, and we are good at capitalizing on the Torch as capital. The combination of excellent industrial platform and capital platform, and the complementary relationship between Weichai and Hunan torch in the industry. It is not hard to imagine what value the Weichai, Shaanxi Auto, Fast and even the Handbridge will use to combine capital. As the battle for Shaanxi Heavy Gas came to an end, the industrial strategy of “National Power, International Weichai†has only just kicked off. 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