"Reverse investment" allows more overseas M & A enterprises to share dividends in the Chinese market
2021-11-04
In the fourth quarter, Anhui Cooper Sealing Technology Co., Ltd. is in a tight production and delivery period. This enterprise focusing on the production and sales of automotive dynamic seals has 38 American employees in Detroit, USA, in addition to its factories in China. Seals are widely used in automobile manufacturing industry, especially dynamic seals, which are essential in key components such as automobile gearbox, clutch, transmission shaft and so on. Last year, Anhui Cooper realized an operating revenue of 418 million yuan; From January to September this year, the revenue reached 367 million yuan, with a year-on-year increase of 29%. Customers include Volkswagen, GM, Audi, Bosch, Honeywell and many other well-known enterprises. Ten years ago, Cooper, an American company invested and established in Anhui Cooper, although it has a high reputation in the industry segment, it has been continuously impacted by the financial crisis. "In 2011, we acquired Cooper company of the United States, which had difficulties in operation, and helped Cooper register a wholly-owned subsidiary in Ningguo, Anhui, namely, Anhui Cooper Sealing Technology Co., Ltd. to enter the Chinese market. Now, the output value of Anhui Cooper has already exceeded that of Cooper company of the United States before the acquisition." said Tong Hui, general affairs manager of Anhui Zhongding holding (Group) Co., Ltd. As a large-scale private enterprise dominated by mechanical basic parts and auto parts, Zhongding has been awarded the "single champion demonstration enterprise in manufacturing industry" by the Ministry of industry and information technology and China Industrial Economic Federation for two consecutive sessions, under the jurisdiction of more than 30 domestic and foreign enterprises, with a sales revenue of 15.8 billion yuan in 2020. M & A is one of the main forms of capital operation and business activities of modern enterprises. In the first mock exam, China's merger and acquisition operation has not stopped being a pure subsidiary, but has been transformed into a new investment entity after obtaining capital injection. China has set up factories in China, shared China's development opportunities and market dividends, and raised its scale and influence. This mode is called "reverse investment" in the industry. Taking Anhui Cooper as an example, Tong Hui told reporters that after the M & A, Zhongding gave full play to its mature supporting advantages in China's auto parts industry, set up a factory in China with American Cooper company as the main investor, and Anhui Cooper's production line was completed and put into operation in the second year. "These overseas enterprises that have encountered operational difficulties may have been competitors, but now they enter China, not only to get out of the operating difficulties and achieve profits, but also to preserve and develop their own brands, but also to make the global industrial chain and supply chain more stable," he said. The effect of "1 + 1gt; 2" not only appears in Cooper company in the United States. Up to now the first mock exam has already introduced more than 120 million foreign capital into the "reverse investment" mode, and the annual output value is about 1 billion 500 million yuan, which has formed a pattern of "two-way cooperation and two-way investment" both inside and outside China. Among them, Anhui tesitong Pipeline Technology Co., Ltd. established by French TFH company has also won the fixed-point projects of Geely, ideal, Zero run and other manufacturers, and the cumulative contribution to life cycle revenue will exceed 3 billion yuan. According to the data released by China Automobile Industry Association, from January to September this year, China's automobile production and sales reached 18.243 million and 18.623 million respectively, with a year-on-year increase of 7.5% and 8.7% respectively. "Entering the Chinese market is not only for manufacturing and selling products, but also more conducive to integrating into the Chinese automobile industry, keeping pace with the development of the global automobile industry, especially entering the early development link of new energy vehicles and becoming a high-quality supplier of new energy vehicle enterprises," said the relevant person in charge of Anhui Cooper. Data show that in the first three quarters of this year, the production and sales of new energy vehicles in China were 2.166 million and 2.157 million respectively, with a year-on-year increase of 1.8 times and 1.9 times. New energy vehicles have moved from the edge of the industry to the core position of main sales models in China. The important characteristics of lightweight have created a larger market for global supply chain enterprises and put forward higher R & D requirements. In September this year, Weilai, a Chinese new energy vehicle enterprise, delivered 10628 vehicles. AMK (Anhui) automotive electric drive Co., Ltd., one of Weilai's suppliers, was established by German AMK company through "reverse investment". It batch supplied Weilai with small assembly products of core components of air suspension system, with a total project life cycle amount of about 131 million yuan. The "14th five year plan" for the development of foreign capital utilization recently issued by the Ministry of Commerce of China proposes that during the "14th five year plan" period, China will further relax the restrictions on foreign investment access in the fields of law, transportation, finance, information transmission, education and medical treatment, and promote a higher level of opening to the outside world. According to the expected quantitative indicators listed in the above plan, by 2025, China will have accumulated the actual use of foreign capital of US $700 billion, and the proportion of foreign capital absorbed by high-tech industries will reach 30%. The linkage between the use of foreign capital and foreign investment, foreign trade and consumption promotion will be further strengthened. "M & A is not an end in itself, nor is it an end point. It is our vision to make more global enterprises glow with new vitality, achieve new development, grow together with them and achieve mutual benefit and win-win results," Tong Hui said. (outlook new era)
Edit：Ming Wu Responsible editor：Haoxuan Qi
Source：XinhuaNet
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