International machinery giants look down on China's machinery companies to deal with difficulties

Recently, the CIEN reporter learned from the XGMG Group that the world’s largest machinery and equipment manufacturer – the US Caterpillar company and Xiamen Engineering Group’s acquisitions negotiations have entered into a hot run. In addition to the price bargaining, the biggest obstacle is that Caterpillar Lele still insists on restricting XGMA's export to the original brand, while Chinese parties including Xiamen's state-owned assets management department hope to retain their own brands.

Gao Yuan En, deputy chairman of China National Machinery Industry Federation, said in an interview with CIEN reporter: At present, foreign companies entering Chinese machinery manufacturing industry can help Chinese companies in economic and technological aspects, and on the other hand, due to the harsh conditions of foreign companies. , Will make China's loader industry has accumulated decades of competitiveness and self-owned brands disappear.

Where to go, Chinese companies are caught in a dilemma.

International predators set off a wave of mergers and acquisitions

According to experts, the average growth rate of cross-border mergers and acquisitions in the 1990s reached 30.2%, which greatly exceeded the average growth rate of global direct investment FDI of 15.1%; acquisitions and mergers became a strategic direction for multinationals in the Chinese market in 2006. .

In October 2005, Xuzhou Construction Machinery Group Co., Ltd., China's largest engineering machinery manufacturer, was acquired by the United States Carlyle Group with an 85% stake. In fact, Caterpillar's competitor Caterpillar plans to relocate the Chinese construction machinery market even more. Leading companies in the Chinese machinery manufacturing industry, including Xiamen Construction Machinery Co., Ltd., Guangxi Liugong Machinery Co., Ltd., Hebei Xuanhua Engineering Machinery Co., Ltd., and Weichai Power Co., Ltd., were all included in Caterpillar's M&A target. , and the "rules of the game" were developed by Caterpillar: Joint ventures should be carried out under Caterpillar's global strategy and subject to Caterpillar's global strategy; Restrictions on the use of existing brands of Chinese companies; The establishment of Chinese companies with the ability to produce Caterpillar Le company's enterprise...

Low-end crisis in the value chain

An industry veteran analyzed in an interview with CIEN reporter: Caterpillar's acquisition of Xiamen Engineering Group is a key issue. Once the merger is successful, it basically establishes its monopoly position in the Chinese loader market.

In this regard, Cai Weici, vice president of the China Federation of Machinery Industry, pointed out: “The strength, depth, breadth, and goal pursued by the current multinational companies to enter the Chinese machinery manufacturing industry have undergone profound changes. Their purpose is not just to occupy the Chinese market. It is also necessary to integrate China's machinery manufacturing industry into its global industrial chain. It is fundamentally necessary to eliminate the possibility of high levels of competition among Chinese companies in the future."

At this stage, the "must be held", "the other party must be the industry's leading enterprise", "the future earnings must exceed 15%", these three points have become the basic requirements for multinational companies in China's acquisition activities. By completing M&A under such terms, China's machinery manufacturing industry can be integrated into its global industrial chain. If the core, key areas, and high-value-added parts are controlled by foreign capital, the development of the industry will be exposed to the dangers of “outside the airspace”. In the international division of labor, China’s equipment manufacturing industry is in danger of being pinned at the low end of the value chain.

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