The potential of the domestic medium- and heavy-duty truck market has ignited the enthusiasm of multinational car companies to join them. On February 18th, Beijing Futian Daimler Automotive Co., Ltd. was formally established in Beijing. After nine years of love and long-distance running, the nation’s largest joint venture of commercial vehicles has finally arrived and entered the "marriage hall."
Joined forces
Daimler is the world's largest truck manufacturer and has the technological advantages of high-end truck and engine production and a global market network. This is a powerful addition to Foton Motors, which intends to enter the global medium and heavy truck market. At the same time, Foton Motor's leading position in China's commercial vehicle market and its price/performance advantage also attracts Daimler, and the two parties can hit it off. After the establishment of the joint venture company, Foton Motor will jointly conduct overseas investment with Daimler to avoid many trade barriers and obstacles, so as to be able to seize the favorable opportunity to occupy overseas markets and achieve a new leap in global business.
According to the agreement, Beiqi Foton Daimler has a total investment of 6.35 billion yuan, a registered capital of 5.6 billion yuan, and the ratio of Foton Motors and Daimler is 50:50. The joint venture company will produce "Fukuda Auman" brand medium- and heavy-duty truck products and Daimler license emissions standards and power respectively to the European V and 490 horsepower Mercedes-Benz OM457 heavy-duty engines. The Auman brand products produced by future joint ventures can be sold overseas through Daimler's sales system; domestically produced Daimler heavy truck engines can be equipped with Auman heavy trucks to enhance the competitiveness of Auman heavy trucks in China and emerging markets. In this way, it is possible to realize the complementarity and benefit-sharing of both parties in the domestic and foreign markets.
“The tremendous progress made over the past few months has cleared the way of our current day-to-day work and the operation of the joint venture in the future,†said Hua Lixin, chairman and chief executive officer of Daimler Northeast Asia Investment Co., Ltd. “Through our 50% stake in the joint venture company, Daimler has further strengthened its commitment to the Chinese market and obtained for us in all segments of the Chinese automotive market, including passenger cars, trucks, commercial vehicles, and financial services. Successfully laid a more solid foundation."
In the past, traditional joint ventures and cooperation in the Chinese auto industry had introduced mature models from foreign countries. Most of the Chinese joint ventures were only assembly plants, and their products were mostly domestic. After the establishment of Beijing Futian Daimler Automotive Co., Ltd., Foton Motors and Daimler will set up joint ventures in Russia, South Asia and Central and South America in phases. Beijing will be the operation center of the global cooperation between the two parties, namely the management decision-making, R&D, production, supply chain management, and marketing management of the global cooperation business of the two parties. The joint ventures such as Russia will serve as a regional production and sales center.
The two sides have broken the old model of multinational auto companies that only set up assembly factories in China since the reform and opening up 30 years ago, and have created a milestone for both Chinese and foreign partners to use China as the operation center and to exert their respective advantages to jointly build the independent brands of Chinese auto companies.
Zhao Jingguang, vice president of Foton Motors, said that in the future, Beiqi Foton Daimler will produce Foton Auman's existing heavy truck products and Daimler's emission standards and power to reach Euro V and 490 hp OM457 heavy truck engines. Daimler will provide technical and expert support, while Foton Motor Co. will retain the overseas market access rights and proprietary rights of intangible assets such as proprietary technology, patents, and brands of "Auman" medium- and heavy-duty trucks.
In the future, Beiqi Foton Daimler will focus on expanding overseas five major emerging markets. The Russian plant will be launched this year, and the Indian plant will be put into operation by the end of next year. Projects in Indonesia, Mexico and Brazil will be launched in succession. In addition, the new joint venture company will greatly promote the implementation of Daimler Truck's global growth strategy and expand Daimler trucks' business development in China, thereby enhancing its position in the Chinese truck market.
Foton plot
The joint venture between Futian and Daimler began in 2003. At that time, the parent company of Foton, BAIC, and Daimler signed a cooperation framework agreement, stipulating that Foton Motor will cooperate with Daimler in the field of commercial vehicles. From 2004 to 2006, the two parties began expressing their desire to establish a joint venture company several times. However, due to Daimler’s full-time joint venture in commercial vehicles in China, the joint venture plan has not been implemented. According to the relevant policies and regulations, the same foreign-funded enterprise can only establish no more than two joint ventures producing similar products in China, and Daimler established Yaxing Mercedes in a joint venture with Jiangsu Yaxing Bus Group in 1997. Until May 2007, Daimler finally broke up with Yaxing Mercedes with all his wishes. While Daimler withdrew from Yaxing Mercedes, he also cleared the obstacles for joint venture with Futian. As a result, both Futian and Daimler returned to the negotiating table again.
“To be a joint venture, it must be based on me.†This is Futian’s attitude of participating in the joint venture negotiations between Futian and Daimler. On this issue, the two sides have been entangled for a long time, taking into account the importance of the Chinese market and the overall layout. The urgency of the Chinese auto market, Daimler finally agreed to the requirements of Foton. In the Foton Daimler joint venture, the president and chief executive officer was appointed by Foton Motor as Wu Yuejun, and the executive vice president was Daimler. Appointed Stefan Albrecht. “Whether it is the personnel arrangement of Foton Daimler, or the information on the models and technical output, it has fully demonstrated the strong posture of Futian.
So, what is Fukuda's strength?
Although the joint venture between Foton and Daimler is a milestone in the joint venture between domestic and commercial vehicles, Foton Motors has successfully entered into joint ventures with world-class companies before the joint venture with Daimler. As early as in 2009, Foton Motors had already established a joint venture with Cummins Inc. from the light engine as a cut-off point for foreign cooperation. It successfully built a high-end brand for light commercial vehicles and cultivated Foton Motor through technical upgrades and management upgrades. Global competitiveness in the light commercial vehicle sector.
After several years of running-in, Foton Motors has achieved a lot in the joint venture. Taking 2011 as an example, Foton Motor's internal cultivation can be described as "fruitful." In April 2011, Foton Motors invested in a multi-functional automobile production base of 3.77 billion yuan in Miyun, Beijing, and announced production; in September 2011, Futian Ouhui Bus Division's Guangdong plant went into production, marking the start of Foton Motor’s Beijing-centered development in Beijing. The layout of the new energy automobile production base that echoes the two major bases in Guangdong and North and South. In 2011, Foton Motor's plant construction project in India has also been fully launched. It has become the first company in China's commercial vehicle industry to build factories overseas. Entering 2012, Foton Motors has turned its sights to the broader international heavy truck market with the intention of “flowering and digging†and continues to write a model chapter of strong alliances. So, on February 18, Beijing Futian Daimler Automotive Co., Ltd. came into being.
Since its establishment in 1996, in more than a decade of development, Foton Motors has established itself as a management center with 9 cities in Beijing, Tianjin, Shandong, Chongqing, Hunan, Hubei, Liaoning, Guangdong and New Zealand. The entire vehicle and parts business division has research and development branches and large enterprise groups located in mainland China and Taiwan, Japan, Germany, and other countries and regions.
According to the 2020 plan announced by Foton Motor, Foton Motor will break sales of 4 million units in 2020 with an operating income of over 400 billion yuan; domestic sales will exceed 2.5 million units, with a market share exceeding 9%; and overseas sales will exceed 1.4 million units. Up to 36%. Among them, Foton Daimler will shoulder the heavy responsibility of overseas sales. In the future, Foton Motor will base itself in Beijing, with Beijing as the center, and establish a strategic alliance with world-class Daimler, Cummins, etc., to become a truly world-class mainstream car brand. “Fukuda Automobile Deputy Party Secretary and Press Spokesman Zhao Jingguang is Foton Motor's internationalization strategy has high hopes.
This time, the joint venture company of Foton and Daimler settled in Beijing, once again demonstrated the status of Beijing as a strategic center in Futian, and, with the expansion of Foton Motor's territory, the status of this strategic center will become even more prominent. Based on Beijing, the strategic layout of Foton Motor's national and global strategy is advancing.
Suspicious to be solved
Now, the two parties have finally achieved perfection, but at this time there are also industry insiders reminded that due to the long process of joint venture negotiations, the joint venture company at the same time, it seems that it has missed the best time of China's commercial vehicle market.
Compared with the growth of China's commercial vehicle market which has experienced more than 30% of annual growth in the past few years, the production and sales volume of China's commercial vehicle market declined significantly in 2011, making it a hard-hit area in all market segments. According to statistics from the China Association of Automobile Manufacturers, overall sales in China’s auto market increased by 2.45% in 2011, while sales of commercial vehicles fell by more than 10% year-on-year, a year-on-year increase of more than 30 percentage points from 2010.
"In all market segments, the commercial vehicle market, especially the medium- and heavy-duty truck market, has the closest relationship with the overall economic development. The faster the economy develops, the greater the number of new projects to start construction and the corresponding demand for medium and heavy trucks. The bigger the industry is,†said industry insiders. “Since last year, the country has intentionally slowed down the pace of economic growth and seems to maintain the same tone in the next few years. This will obviously give Fudan Daimler a chance to follow up with him. There are some uncertainties."
In addition, Futian Daimler will face some powerful challenges from its new rivals in the future. According to news recently, Dongfeng is planning a joint venture with Volvo Truck Company. In the future, the company will produce Dongfeng-brand trucks as well as Volvo-brand trucks. Weichai Power is also seeking full integration of Shaanxi-based Heavy Duty Trucks. Relying on strong engine core technical capabilities, the company has expanded the truck vehicle industry.
Therefore, whether Volvo trucks or Weichai, all "are not fuel-efficient." Volvo had previously established a joint venture with Sinotruk to have a certain understanding of the Chinese market. Weichai, on the other hand, is a leading company in the field of truck engines in China and has the inherent advantage of entering the vehicle market. So for the just-established Fukuda Daimler, the challenge has only just begun.
According to industry insiders, Foton Motors has benefited from the agreement of the joint venture company Beiqi Foton Daimler. However, this is likely to be just a way for both parties to hope that the government will approve the application as soon as possible. In fact, Foton Motor has made many concessions. Although the joint venture agreement seems to be beneficial to Foton Motor, the technical support obtained by the Chinese joint venture company is indeed very limited. Daimler provides only the OM457 engine, and the rest has Beiqi Foton-Dam investing in research and development. Cooperation between the two parties is likely to face many hidden concerns. For example, in the joint venture company, the Chinese market will continue to dominate the future, but the Foton Motors Auman brand is included in the Mercedes-Benz commercial vehicle marketing system, and the establishment of joint ventures overseas has not been mentioned. Foton Motor is unlikely to gain support from Daimler in overseas markets. At the same time, it is not possible to directly introduce models for localized production and sales. Therefore, Fukuda still has to independently develop its own core technologies.
Catalytic factor
Fukuda and Daimler entered a formal joint venture and cooperation, which means that the fourth wave of foreign investment in the heavy truck industry in China has reached another peak. While opening up the fifth joint venture new model for the heavy truck industry, it also provides a reference for more independent brands' cross-border alliances.
Industry insiders believe that the joint venture between Foton and Daimler has the distinctive feature of the fourth wave of the introduction of the truck industry. It retains local brands and introduces foreign advanced management methods. The dominant power is in the hands of the Chinese rather than a simple market for technology. In the process of the joint venture with Daimler, Futian’s protection of China’s interests was in place, and it could even be said to be unprecedented. Whether it is the distribution of internal management rights such as the president’s vice president selection, parts procurement, or the authorized use of trademarks, or the paid transfer of new GTL models, or even the division of sales rights at home and abroad, Fukuda guarantees their rights and interests directly. It also indirectly guarantees the benefits of foreign parties. The foreign side also realized that blindly pursuing the control of the joint venture company does not guarantee the maximization of its own interests, but may result in the loss of benefits.
Prior to this, the existing joint venture vehicle models in the industry included Dongfeng-Nissan’s full-scale joint venture, SAIC and Iveco’s joint acquisition of Hongyan’s three-way model, Man’s participation in the form of equity participation in Sinotruk, and the traditional 50:50 Sino-foreign joint venture ( Such as Huawo, Dongfeng Nissan Diesel, etc.). Although the joint venture between Foton and Daimler has followed the external form of the 50:50 stock ratio between China and foreign countries, it can be said that it substantially exceeded the above several models in terms of substance and has a strong sense of innovation.
According to the information currently publicly disclosed, the joint venture company has a total investment of 6.35 billion yuan and a registered capital of 5.6 billion yuan. The stock ratio of Foton Motors and Daimler is 50:50. The joint venture company will produce Foton Auman's existing heavy-duty truck products from Futian Auman and Daimler's permit emissions standards and powers to OM457 heavy-duty engines with Euro V and 490 horsepower, respectively. In other words, the joint venture company is a single-brand operation, "Auman" has a dual identity, is not only Futian's own brand, but also Mercedes-Benz in the global low-end brands, while both sides have strong support. After the establishment of the joint venture company, Beiqi Foton and Germany's Daimler will also establish joint ventures in some developing countries and emerging countries to export the Auman brand and products to the world. The depth and breadth of this kind of joint venture cooperation are unprecedented.
The establishment of the Foton Daimler joint venture will likely bring new "catalytic factors" to the heavy truck industry. On the one hand, it declared that among the top nine of China's heavy trucks, there is a shadow of a transnational giant behind a brand. For Daimler, the resources and market position Fukuda has in low-end and medium-end heavy-duty trucks are what it urgently needs; for Futian, Daimler's advanced technology, global operating experience and resources are able to To a large extent, Futian's overseas strategy was deployed and the implementation of its “2020 Strategy†was further promoted. The combination of the two parties will bring more medium and long-term variables to the pattern of China's heavy truck market.
On the other hand, the joint venture of Fukuda Daimler will provide valuable experience for the late wave of the fourth wave of introduction. At present, it is foreseeable that, after Futian and Daimler, there will be more Sino-foreign joint ventures happen in the heavy truck industry. Some people predict that the next three years will be three years of major changes and major adjustments in China's heavy truck industry. In order to seek its own scale and strength, the combination of autonomy and independence, autonomy and cross-border will become more frequent, and heavy truck industry opportunities There is a huge challenge in it.
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