Foreign-owned car companies fully receive rights as joint venture companies

When China settled on the world’s largest automobile production and sales powerhouse, and gradually became a paradise for multinational car companies to attract gold, multinational giants not only increased investment in the Chinese market, but also expanded their shareholdings in the joint venture company, controlled sales rights, etc. To further expand the right to speak. The development of multinational car companies in China has entered a stage of comprehensive income. Under this situation, the role and status of Chinese companies have become increasingly paradoxical and they are gradually becoming a situation for multinational car companies to establish factories.

Foreign parties fully receive rights In the near future, the news that Beijing's Mercedes-Benz and Mercedes-Benz China have integrated their sales channels is rampant. Insiders believe that Daimler plays a key role in it. At the same time, FAW-Volkswagen also began to clean up its second-tier dealer network on a large scale, covering more than 30 cities such as Kita-Shang Guangshen, and plans to build its own logistics and sales channels. All this has been interpreted by the industry as a move for foreign investors to take full power.

If there are concerns that foreign auto makers hoped to gain more say in joint venture companies six years ago, then with the gradual gains in the Chinese market and the introduction of relevant regulations in 2005, it has become justifiable for foreign car manufacturers to collectively receive rights. Reasons and ways.

After the end of the 2004 downturn, the Chinese auto market in 2005 began a new round of upswing. That year the Chinese auto market surpassed Japan by 5.92 million vehicles and surpassed Japan to rank second in the world, second only to the United States.

The growing market size has caused foreign automakers to consider the establishment of wholly-owned sales companies to replace the sales model of imported vehicles of general agents. It is worth mentioning that the “Implementation Measures for Automobile Brand Sales Management” promulgated and implemented in 2005 (hereinafter referred to as “ Measures") has accelerated the behavior of foreign car companies to channel their rights.

The "Procedure" stipulates that "in order to sell automobiles in China, overseas automobile manufacturing enterprises must authorize domestic enterprises or set up enterprises in China as their general automobile dealers in accordance with relevant state regulations, and formulate and implement network plans." As of now, this regulation is still very controversial. The requirement that imported car manufacturers set up general distributors or general distributors in China has become a “pass” for foreign car manufacturers to receive comprehensive rights at that time.

BMW, Mercedes-Benz, Volkswagen, Volvo, Rolls-Royce, Lamborghini, Ferrari and other multinational giants who entered China earlier, took the lead in kicking off Chinese agents and set up wholly-owned sales companies as general distributors or general distributors in the Chinese market. The domestic agents who purchase from the manufacturers are downgraded to the second-level agents that are purchased from the sales company. Foreign companies have learned most of the profit from imported vehicles in this way.

With the increasing sales in the Chinese market, the vast majority of multinational car companies entering the Chinese market have changed to this mode of operation. Last year, Land Rover and Renault set up sales companies in China. Even Aston Martin, a niche luxury car brand, announced this year that it will set up a wholly-owned subsidiary in China to control sales in China.

At present, only a handful of brands, such as Subaru and Bentley, have not established a Chinese sales company, while more foreign companies have merged imported cars and domestic cars into one channel and have full control over the marketing channel.

Not only that, the gradual expansion of the right to speak in the Chinese joint venture company, the more benefits of the joint venture company also become another shortcut for foreign parties to receive their rights.

Taking BMW, a luxury car brand, as an example, in 2003, BMW Brilliance Automotive Co., Ltd. was established in China. The Chinese and foreign parties are established on the basis of equality. The two parties each hold 50% of the shares and each holds three seats on the board of directors. However, with the opportunity to replace the president of BMW Brilliance at the beginning of 2007, BMW included marketing promotion, brand communication, advertising and channel management in its bag, and completed an important step to fully control the joint venture company. This adjustment is also known as "BMW's rights to the joint venture company, BMW Brilliance is a foundry's behavior."

The game between the Chinese and foreign parties in terms of discourse power does not only appear in the BMW luxury car brand. In fact, in the past many years in almost all joint ventures, from top to bottom, the dark war between the Chinese and foreign sides has never stopped.

Recently, the news that Volkswagen plans to increase its shareholding in the FAW-Volkswagen JV has increased from the original 40% to 49%, and GM has also planned to recover its 1% stake in Shanghai GM that it had sold more than a year ago.

Behind the power is the prying into more profits.

According to the company's public data, in 2010, the net profit of FAW-Volkswagen has reached 22 billion yuan, and that of Shanghai Volkswagen is 12 billion yuan. According to the joint venture ratio, nearly one-quarter of the global profits of the Volkswagen Group in 2011 came from the Chinese market. “For the Volkswagen Group, fighting for one percentage point means increasing revenue by several billion yuan each year.” Jia Xinguang, an automotive analyst, said frankly.

At the same time, FAW-Volkswagen has announced that it has officially cleared non-authorized secondary distributors. This is the largest channel rectification since the establishment of FAW-Volkswagen. According to the head of the marketing department of FAW-Volkswagen Sales Co., the move is intended to increase the sales and service capabilities of channel providers.

However, the objective fact is that the dominant role of Volkswagen in the joint venture gradually extends from product, technology, procurement and management to marketing and aftermarket.

The intrinsic nature of China’s status has driven foreign companies to use their unique technological advantages to expand control in China and gain maximum benefits.

Ren Xuehong, deputy general manager of EF International Consulting Beijing Co., Ltd., believes that this behavior is in line with business logic. “Foreign investment enters the initial stage of the Chinese automobile market. Market competition is based on products. Because it is not familiar with the Chinese market, foreign parties cannot There are too many resources invested in the market and sales, but with the competition in China's auto market to channel management and marketing in full swing, it is unavoidable for foreign companies to strengthen control over the joint venture's market and marketing."

The key issue is that Chinese car companies seem to have defaulted on this kind of behavior by foreign parties. An industry insider once lamented that none of the major automotive groups in the country rely on their joint ventures to provide support, either in terms of sales volume or corporate profits. Under this premise, no one would undermine this understanding. On the other hand, it also lost the momentum of independent innovation.

In fact, the foreign companies in the joint venture company have full control over the procurement, sales, planning, and even personnel rights of the company, so as to earn more profits in the industry chain. What the Chinese can earn is only half of the profit in the name of the joint venture company, and The government’s local government revenues and employment and other social benefits, even if the foreign party repeatedly received power, the Sino-foreign joint venture relationship still maintains a certain balance point.

However, this balance has strangled the instinct of independent innovation in the Chinese automobile industry.

Gasgoo.com survey shows that about 31% of people believe that "in the long run, foreign capital will intensify the control of business operations is an inevitable trend," and 58% believe that foreign capital is currently fully accelerating the control of operating rights. , And the recent changes in equity have exposed such signs.

Gasgoo.net analyst Yang Li believes that in joint venture auto companies, foreign capital occupies a dominant position in product and technology introduction, production management and quality control, and in order to seek greater benefits, they also extend control to the upper reaches of zero. Parts companies.

According to statistics, in key areas such as high-tech products such as automotive electronics in China, and core components such as engines and transmissions, the market share controlled by multinational companies is as high as 90%, and the parts and components market accounts for more than 60% of the market share. In the auto parts industry, some experts estimate that multinational companies control more than 80% of the market.

The parts and components industry is still in a “hollow” state, and it is not surprising that the entire automobile manufacturing industry has been “empty” by multinational companies.

Although more and more domestic auto companies now have independent innovation and development of their own brands on the strategic height of survival, it is not easy for joint ventures that lack the motivation to resolve this "soft burden".

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