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On the morning of November 10, the reorganization of Changan Automobile, which took formal negotiations for a year, finally ended. Both the Armed Forces Group and AVIC are military-industrial enterprises. Both were selected as Fortune 500 companies this year. Therefore, this reorganization has become the largest strategic restructuring of the automotive sector between the central enterprises so far, and it is also the first large-scale, cross-departmental, and deep-level cooperation in the field of national defense technology industrial civilian products.
According to the reorganization plan, AVIC Industries will use the shares of Changhe Auto, Hafei Motors, Dongan Power, Changhe Suzuki and Dongan Mitsubishi as its holdings, and the Changan Automobile Group under the Corps Group; the Corps will hold a 23% stake in its Changan Automobile Group. Assign AVIC. The two groups reorganized to form a new military group holding 77% of shares, AVIC holds 23%. On the eve of the reorganization of the signing, the capital floated overnight, indicating a good prospect for the new Chang’an “Swiss Snow Mega Year†and also implying the chilliness of the new Chang’an on the Fengnian Road.
Ruixue Megan
The joint reorganization allows Changan Automobile to come in. According to the data from the China Association of Automobile Manufacturers, in the first 10 months of 2009, Changan Automobile sold 1.065 million vehicles, realized revenue of 6.118 billion yuan, a year-on-year increase of 122%, and achieved a net profit of 309 million yuan, a year-on-year increase of 389%. The increase ranked among the top four groups. first place. “In the months of September and October of this year, sales of Chang'an Yuexiang exceeded 10,000 units, and the demand for products exceeded supply. The Chang’an Automotive Technology Center ranks eighth in the country and ranks first in the automotive sector in the ranks organized by various ministries and commissions. Before January 1, this year, the Beijing Automobile Research Institute of Changan Automobile will start.†Changan related sources said.
From the sales data for the first 10 months of this year, after the reorganization of Changan and the new CNAC, the total sales volume was 1.5276 million units, and the market share would reach 14.02%; although it was lower than the SAIC and FAW's 2,172,800 and 1,561,700, it was high. Dongfeng's 1.499 million vehicles. In terms of product and production base layout, the new Changan Automobile Group will have nine major vehicle production bases in Chongqing, Heilongjiang, Jiangxi, Jiangsu, Hebei, Anhui, Shanxi, Guangdong and Shandong, 21 vehicle factories and 27 directly-owned enterprises across the country. With an annual production capacity of 2.2 million vehicles and engines, it has built overseas bases in countries such as Malaysia, Vietnam, Iran, and Ukraine, and has become the largest automotive group in production bases. After the merger and reorganization, the dream of new Changan to achieve annual sales of 2 million vehicles is already within reach.
According to relevant personnel of the Xinchang News Office, as of the end of October this year, the total sales volume of the new Changan mini-vehicles after integration was 810,000, and that of SAIC-GM-Wuling was 850,000. There is only a gap of 40,000 between the two. “Micro-vehicles are very sensitive to cost control such as logistics and procurement. Sales volume growth is closely linked to channel distribution. If Changan reintegrates Hafei and Changhe microcar components, the three mini-vehicle bases will be at the top of the Chinese auto market. The important area is of strategic importance to the improvement of the Changan Automobile Mini Vehicle Division, said Zhongshi, an automotive analyst.
The AVIC Group, the other party to the marriage, is also content. At present, among Changjiang, Hafei, Dongan Power, Changhe Suzuki and Dongan Mitsubishi, only Dongan Power is profitable; Changhe and Hafei are still in losses. After allocating these auto assets to Xin Chang'an, AVIC obtained a 23% stake in New Chang'an, and will not have to worry about car business in the future and can directly obtain dividends. According to Xinchang’s annual net profit of RMB 800 million, AVIC can allocate at least RMB 200 million each year. On the contrary, if there is no merger and reorganization, AVIC will need to continue to invest in Changhe and Hafei in the future, and the investment result may still be a loss. Comparing the two, merger and reorganization will undoubtedly benefit AVIC.
At the signing ceremony, Li Fangyong, chairman of AVIC, stated that AVIC's reorganization of sedan mini-vehicles with Changan is a strategic choice, and other automobile businesses are still an important part of AVIC. The meaning of this sentence is quite deep. It is understood that in addition to cars and mini-vehicles, AVIC also has special vehicles and buses. According to insiders, most of these products can be sold within AVIC's system and are profitable. As early as before the reorganization, AVIC assigned special vehicles and buses to the China National Aviation Corporation, and the five major blocks, Hafei and Changhe, were assigned to the China Aviation 2nd Group. After the merger and reorganization, AVIC gained a 23% stake in the new Changan by virtue of the five major segments of Haicang Group II, such as Hafei and Changhe, while retaining the lucrative profits from the special vehicle and bus business. "AVIC has become a shareholder of the new Changan and will participate in the decision and operation of the new Changan through the board of directors, avoiding rumors of previous mergers."
Xu Liuping commented on the advantages of the merger and reorganization. First, both Chang'an and CNAC have their own advantages, and they can achieve joint advantages and win-win cooperation. After the two companies have become a single company, it is conducive to making overall arrangements so that resources can be fully flowed and shared. Second, both are military enterprises. They are all independent automakers and have similar cultural backgrounds to ensure cultural integration. Third, the Chinese auto industry is currently in a period of development opportunities, providing a good environment for restructuring and integration. “This reorganization will have some impact on the Chinese automobile structure and provide a basis for Changan to grow stronger and bigger.â€
Chilly
At the signing ceremony, when Xu Bin, Chairman of China Weaponry Equipment Corporation, and Lin Mingbo, Chairman of China National Aviation Industry Corporation jointly handed over the "China Chang'an Auto Group Co., Ltd." brand to Xu Liuping, the two also said "Please. "Two words. From then on, Xu Liuping shouldered a heavy burden: managing the reorganization of the new Changan, allowing two companies with different cultures and different operating models to gradually integrate.
“At that moment, what I experienced was a sense of responsibility and a sense of mission.†Xu stayed flat. “Today is the face of flowers and applause, but how to live up to it in the future is how to live up to expectations. This is our biggest task.†He believes that The problem faced by New Chang’an is the difficulty of post-merger operations management and cultural integration. In the long run, the key to integration is the determination of the high-level team, the integration of culture and management systems, and the gradual integration of resources. "The most fundamental thing is to achieve complementary advantages, win-win cooperation, and cultural integration."
Two sections of history are worth revisiting. In the 1980s, Changhe and Hafei also conducted a reorganization, but the results were not satisfactory. Prior to this, after Changan Automobile merged with Jiangling Motors, its sales of Landwind, Fashion and other brands have not seen much improvement. How to draw on the experience of these two cases and help Xinchang succeed in managing operations will be one of Xu Liuping's thoughts. Although Li Fangyong, chairman of AVIC, believes that the integration of Changhe and Hafei was not a failure, it provided experience for later. In addition, the integration between Changhe Hafei is not as good as Chang'an, and the integration between AVIC and CNAC is more thorough. However, Li Fangyong also admitted that it is easy to enter a family and become a family member that needs to be worn out.
In each merger and reorganization, employee arrangements are very sensitive and thorny issues. In July this year, when a private company merged and reorganized Jilin Tonghua Iron and Steel State-owned enterprises, there had been relatively unpleasant employee incidents. Although some people believe that this reorganization is a combination of the two central SOEs led by the SASAC and there are strong support from the relevant national departments, similar incidents will not occur. However, if employees of Hafei or Changhe become passively absent, the operation of the two companies will be further difficult. New Changan’s plan to achieve a production and sales volume of 2 million through mergers and acquisitions will be greatly reduced. “The area where Hafei and Changhe are located is very rampant. It is a big challenge to properly handle the staff problem,†said an industry analyst.
"After the merger of the two companies, Changhe, Hafei and other companies will have any changes in the staff? Are they unchanged, increase staff or layoffs?" In response to a reporter's question, Xu Liuping said that the future Changhe, Hafei and other five companies employees Will remain unchanged. “Excellent talent is the wealth of the company.†But the problem is that one of the reasons for the long-term loss of Hafei and Changhe in recent years is the high cost of labor and low efficiency.
A worker who worked at the Tianjin Automobile Factory for many years told the reporter that when Tianyi was reorganized, FAW appointed middle-level officials to serve in the post, and many of the original middle-level cadres of Tianjin Automobile turned into deputy positions. This helped optimize management, but it also caused a Loss of talent. In the reorganization of SAIC-GM-Wuling, Shenyang Wuling, general manager of the original Wuling, continued to serve as general manager of SAIC-GM-Wuling, facilitating the communication and integration between SAIC, GM, and Wuling. "These two cases will be a good reference for Xinchang."
After the merger and restructuring difficulties, Xu Liuping had long expected. He concluded that the integration of the two companies in the management marketing model will take several years to survive. "After the merger and reorganization, opportunities and challenges coexist, but first is an opportunity. We will adopt a gradual integration model."
Unresolved
The signing ceremony of the day only confirmed the general framework of the merger and reorganization. There are no specific answers to the issues concerning the establishment time of the board of directors of the new Chang'an Automobile Group, the personnel arrangement, the relationship with the joint venture partners, and the retention of the Changhe Hafei brand.
At present, the board of directors of New Chang'an is under preparation. According to the relevant personnel of the New Chang'an Information Office, as the most critical department after the merger and reorganization, the board of directors will surely be established as soon as possible. "It is expected that it will be completed before the end of November." For personnel, the exact news is that Xu Bin, Chairman of the Armed Forces Group, continues to serve as the chairman of the new Changan Group; Xu Liuping will continue to serve as the president of the New Changan Group, with a specific leadership team and The middle-level personnel arrangement has not yet been finalized. According to other sources, Changan will send management personnel to Changhe, Hafei and Dongan Power. The new board will re-elect the management, but employees below the middle level will not have much adjustment.
Changhe and Hafei brands have been in the micro-vehicle market for a while. After the merger and reorganization, Hafei and Changhe brands continue to retain or merge into Changan brand? Although there is no clear answer, Xu Liuping said that Changhe and Hafei have their own user bases and they must play their role in the market. A staff member of the New Chang’an Information Office also stated that the user base of the mini-vehicle is regional, Changhe has advantages in the northern regions such as the East Three Provinces and Beijing, and the Chang’an mini-vehicle has advantages in the southwestern regions such as Chongqing and Sichuan. Wuling has advantages in areas such as Fujian and Jiangxi. Therefore, Changhe and Hafei brands still have value.
Regarding relations with joint venture partners, Xu Liuping proposed to walk on two legs. "After the merger and reorganization, the new Chang'an joint venture and cooperation will continue and independent innovation will continue." Regarding the cooperative relationship with Suzuki, Xu Liuping said that in the future, New Changan will discuss with Suzuki how to integrate Chang'an Suzuki and Changhe Suzuki. "The two will move in one direction, but not overnight, but will do the most appropriate thing at the most appropriate time."
At the signing ceremony for the reorganization of the day, the PSA executives also arrived at the scene, and Xu Liuping had a good talk with him. Xu Liuping said that AVIC had already had a thorough discussion with PSA in the early stage, and the cooperation between the new Changan and PSA should be continued and strengthened. "We already have a number of partners, and one more is not a problem. The main point is how much the value of the cooperation is. As long as we have a good conversation with PSA, it does not make sense for Xin Changan to accept it."
Some time ago, Geely Automobile obtained the right of first refusal of Volvo. Does this have an adverse effect on Changan Ford Volvo? In this regard, Xu Liuping said that Changan and Volvo currently work very well and the product contracts they have signed have not changed. "We have signed product contracts for the Volvo S80, S40 and future products. All of them are legally guaranteed. Even if Volvo is sold, the business of New Chang'an will not be affected."
Despite many unresolved issues, Xu Liuping is still confident about the prospects of Xin Chang'an. He said that the next 10 to 20 years will be the golden period of China's auto industry. The goal of the new Chang'an is to vigorously promote joint ventures and cooperation in accordance with the concept of "complementary advantages and win-win cooperation". By 2012, the total vehicle sales will exceed 2.6 million units, and it will initially have the ability to participate in the international mainstream automotive market competition. By 2020, a relatively complete product line will be formed, and independent brands will enter the high-end market, and the total vehicle sales will reach 5 million.
View related topics: Military Equipment Group and AVIC Restructuring - Changan M&A Changhe Hafei