The merger and reorganization of the automotive industry can not be "destroyed"

During this period, the strategic cooperation between Dongfeng and Fuqi became another typical case of merger and reorganization in the automobile industry. The cooperation between the two parties has not only led to the discussion of the incident itself in the media industry, but also roused the collective recall of the past merger and reorganization cases in the automotive industry.

Since 2009, the actions of large-scale mergers and acquisitions have been repeated: GAC Group has acquired Changfeng, China Changan merged with Hafei, Changhe, Guangqi reorganized the Gonow car, and Beiqi annexed Guangzhou Baolong. Under the dual push of the government and the market, the merger and reorganization of the automobile industry has come a long way. However, the bright hands of the two parties shaking hands under the spotlight can hardly hide the hard work behind them. With the results of mergers and acquisitions paralyzed, the automotive industry has to reflect on the need for mergers and acquisitions in China's auto industry.

It is undeniable that in the course of the development of the automotive industry in China, not every case of mergers and reorganizations was successful, and it could even be said that most of them failed. Some mergers and reorganizations may ultimately be the negative energy that pushes an enterprise to "death." From an international perspective, the success rate of mergers and acquisitions is also very low. Even the United States' "big three" auto companies will be stripped after mergers and acquisitions because of indigestion.

For the young Chinese auto industry, the difficulty and complexity of mergers and acquisitions are much higher than those faced by multinational car companies. Taking the cooperation between Dongfeng and Fuqi as an example, the Fujian provincial government that is the major shareholder signing on behalf of Fuqi itself is not the main body of the company. According to the analysis, the Fujian Provincial Government hopes that this reorganization will fill the famine that was previously lost. In other words, the mergers and acquisitions that occurred in the Chinese auto industry have many reflections of the government behind them. Some of them are matchmaking and some are self-introduced. This feature has also made the advancement of mergers and reorganizations of the later period unprecedently complicated. More importantly, it is difficult for companies that dominate mergers and reorganizations to make adjustments in accordance with market rules.

Although it is difficult to do mergers and reorganizations, the voice of vigorous promotion is getting higher and higher. There are two reasons for this, according to the author's speculation: First, because some local state-owned enterprises have flaws in their survival, local governments find it difficult to support them but they are reluctant to close them, while mergers and reorganizations are "preserving both the local industry and employment." The second is because the auto industry's exit mechanism has not yet been established, and the production qualification is still scarce. Instead of allowing these companies to produce zero sales, it is better to be merged into a large group, and at least be able to be integrated with resources and play a “remaining fever”.

To promote the merger and reorganization of the automobile industry, its significance does not stop at the prosperity and decline of a company. In the final analysis, for the “big man” in China’s auto industry, it is imperative to be strong. To be strong, mergers and reorganizations are a way to go around.

The first is the natural choice of the market. Despite wearing the government's colors, the rules for the survival of the weak and the survival of the fittest also exist in the automotive industry in China. To be precise, the commercial nature of automobiles fundamentally determines the market competitiveness of production companies. With competition, there will be life and death. At present, there are still hundreds of auto companies in China rushing to eat a market cake, and the competitiveness is weak and inevitable.

The second is the need for international competition. In China, the competitiveness of the automobile industry has always been regarded as part of the national competitiveness system. Too fragmented industrial structure is obviously not conducive to the formation of competitiveness. At the government level, its policy orientation is very clear. It is to build several large automotive group “aircraft carriers” and participate in international competition.

Finally, the maturity of mergers and acquisitions conditions. On the one hand, it is an opportunity for mergers and acquisitions. Since last year, China's auto industry has entered the era of micro growth. Market competition has changed from incremental competition to inventory competition. This change means that competition is more brutal and it also provides an opportunity for mergers and acquisitions. On the other hand, it is the upgrading of M&A capabilities. Having reviewed several major automobile groups in China, FAW, SAIC, Dongfeng, Chang'an, Guangzhou Automobile and so on have all practiced in mergers and reorganizations. They have successful experiences and also have failed lessons. In any case, they have accumulated a certain amount of experience and have acquired confidence and confidence in M&A.

At the time when Dongfeng and Fuqi are holding hands, China’s auto industry circles should be less accusatory and more blessed. Because from the big auto country to realize the dream of building a strong automobile country, mergers and reorganization of this road, the Chinese auto industry must go.