Focus: N Path Choices for Brand Upgrade of Chinese Manufacturing Enterprises

For Wenbo, the appetite seems to be getting better after the acquisition of Putzmeister (the industry's so-called "elephant"), which had ranked first in the world in terms of concrete.

Xiang Wenbo is Vice Chairman and President of Sany Heavy Industry. In January 2012, Sany signed an M&A agreement with the elephant through “Flash Marriage,” and on July 24, the elephants paid for 8.1 million euros to acquire a 100% stake in Intermix GmbH (hereinafter referred to as IGH). Founded in 1984, IGH was the third largest producer of concrete mixers and special mixing equipment in Europe.

It is not difficult to see that the significance of the previously mentioned acquisition of elephants by Wenbo as "strategic acquisitions" rather than "finance and acquisition" is gradually emerging - after all, when a German-headquartered company was used as a bridgehead, the debt crisis in Europe was spreading. To further integrate and integrate resources in the industry at a low price, the convenience of its operation can evade the cumbersome and tedious process of “approve the license first and then release” in the review process; and elephants can therefore not only help the 31 in their own technologies and channels. Internationalization, in the process of SANY integration of global resources, elephants will become more easily accepted by foreigners as the "Taiwan spokesperson."

Of course, in addition to M&A, there are many methods available for upgrading Chinese manufacturing brands, such as setting up factories overseas, going to sea, business subcontracting, etc.

M&A: Yes. On August 14, PricewaterhouseCoopers released data showing that in the first half of 2012, M&A transactions in China fell by 25% year-on-year. However, unlike this, the global macroeconomic downturn did not seriously affect China’s overseas M&A transactions. The number of overseas M&A transactions in China this year has only fallen by 6%, but the transaction amount was about three times that in the first half of 2011, and The annual transaction amount is expected to exceed 2011.

PricewaterhouseCoopers partner Liu Xilai, a Chinese corporate merger and acquisition company, said that Chinese companies are seizing the opportunity to buy overseas markets and vigorously acquiring overseas energy and industrial technology-intensive companies. "From the perspective of the history of the competition, mergers and acquisitions, restructuring, and becoming bigger and stronger are indeed one way to weaken our competitors. M & A, of course, can accelerate the process of internationalization of Chinese companies," Xiang Wenbo told reporters.

The reason why he turned his eyes to Europe and not the United States was to Wen Bo's view, precisely because the United States was too sensitive to mergers and acquisitions and market competition. “First of all, Chinese companies will not have M&A opportunities without enhancing their competitiveness. They will not be better than others. They will not only have no chance to acquire companies, but will be acquired by others.” Xiang Wenbo said, “At the same time, Europe is the place where the Industrial Revolution took place and accumulated a lot. The combination of technology and talents, European technology and brand development in the developing market will form a good boost to the performance of the acquired companies. In the first half of the year, elephant revenues increased by 13% year-on-year and profits increased by 79%."

However, this does not mean that the risk of mergers and acquisitions is reduced.

According to Wen Bobo, the time for China’s equipment manufacturing to enter Europe is not long, and the process of China’s manufacturing to Europe is still far away: “Glass door” phenomenon exists in the European market, such as industrial protection policy (Euro 5 emission requirements, road driving Security standards, etc.), technical barriers abound; and because it is a high-end mature market, the user's brand loyalty is high, Chinese companies must be localized after mergers and acquisitions, not only to consider the cost, but to consider the satisfaction of customer needs, The establishment of service centers and other series of problems.

“Currently, Chinese companies have not bought much like sample cards in Europe; to say the least, even if the quality of the products of the two countries is the same through mergers and acquisitions, the gap between China and Germany’s manufacturing is still very large. It is only the perception of brands and customers. It takes a long time to accept.” Xiang Wenbo said that competition in the market is fair. China currently does not have the soil to produce large international companies. On the surface, it is a question of the need for continuous improvement in internal management, cost reduction, and quality improvement. But at a deeper level, Western companies’ management theories all have assumptions and preconditions such as religion, culture, attainment, and legality. Under China’s unique cultural premise, China’s management theory that can be extended to the world based on national conditions has not yet been produced. Therefore, At a deep level, the internal strength of Chinese companies is not enough to support their internationalization.

As for breaking through certain barriers to mergers and acquisitions, sometimes it is not a big problem.

Setting up a factory: Relabeling In Alessandro Rosso of Yirong (Shanghai) Business Information Consulting Co., Ltd. (hereinafter referred to as "Illino Business"), Chinese investors are generally more afraid of investing in Italy. First, there are language barriers, and second, everyone's investment. Different habits, other countries have such a feeling of investing in Italy. "Italian law is quite complicated. What we need to do is to help these Chinese companies understand Italian law." Alessandro Rosso said that now many Chinese people come to Italy to hire Italian designers to register brands that look like Italian names, but in fact they are all The Chinese are pioneering. They generally sell their products back to China through these “counterfeit” brands. People think that they are Italian brands. This is very beneficial to them, but it is not a long-term solution.

“Some Chinese companies are very brave. Like Erdos woollen sweaters, they have the courage to take their products to Milan Fashion Week, and to open their own boutique in Milan’s famous famous street to enhance their brand awareness. It is a very far-sighted and correct road," said Alessandro Rosso. “Milan is equivalent to a Trojan horse for Chinese fashion.” Alessandro Rosso even asserted that if Chinese brands launched more fashion products in Milan as early as possible, China would reach the 100 most famous international fashion designers in five years. 10.

The problem is that the results of unfamiliar Chinese brands displaying in Milan, even in Paris, London, and New York showcase, often in the short term, are far more than investment, and whether there is a better “shortcut” to enhance Chinese manufacturing during a long brand growth period. Brand reputation?

"Acquisition is a good approach, but now is the opportunity to buy, but for some high-end brands, 30 million euros is certainly not enough, generally need 670 million -700 million euros to reach a purchase. Versace offers over 600 million -700 million euros, D&G is about 2 billion Euros, and Prada is probably about 4 billion Euros. Of course, these numbers are just references, and it's not enough to get the money to buy it,” said Alessandro Rosso.

Obviously, such a huge amount of investment is by no means acceptable to ordinary Chinese companies. Alessandro Rosso thus gave a more practical approach - investing and setting up factories in Italy. “There was once a Chinese company wishing to buy a company that produces furniture in Figaro. According to Italian law, as long as one or two accessories are produced or manufactured in Italy, they can be tagged with 'Made in Italy'. This Chinese company hopes Through this move, the furniture is individually processed in Italy and then sold back to China for better prices.” Alessandro Rosso further explained that in the past, Chinese manufacturers were tagged with low-priced, poor-quality labels. It is necessary to change this situation.

Baotuan: Risk Reduction “Chinese companies do not understand Italy’s environment, laws, and lifestyles. We hope that a team can invest rather than a single individual to become bigger and stronger,” Alessandro Rosso emphasized.

This statement was actually practiced by many Chinese companies. "For more than 20 years, Prato in Florence has formed a Chinese city of about 100,000 people. Whether the factory owners or workers are from Yiwu and Qingtian in Zhejiang Province, they are like the OEM companies who have gotten up early in the country. The business was opened at the doorstep of an Italian-made house. Incomplete statistical data suggests that legal residents are only one-fifth of that.” Zhang Minjian, a Guangzhou native who lived in Italy for eight years, told reporters that PRADAs are even inseparable from these Italian OEMs in China. Manufacturers, after the brands have outsourced their production orders to their trusted Italian processing plant, the Italian processing plant itself will only produce a small part of the order, and most of the orders are subcontracted to the Chinese foundries at low prices.

It is not difficult to find that, similar to the industrial clustering in Wenzhou, Zhejiang, or Jinjiang, Fujian, and the low cost characteristics of Chinese workers, even Chinese small and medium-sized manufacturers have become an integral part of PRADA's supply chain.

Similar examples can also be cited many.

In May 2008, when the former Prime Minister of Hungary Myersi was interviewed by a reporter from Guangzhou Daily, Hungary had hoped that Chinese companies would like to invest and prepare to establish an economic development zone that would provide services for Chinese enterprises. Hungarian Investment and Development Council chief George? Rettfoyy even stated: "Chinese enterprises investing in Hungary can obtain preferential taxation, and projects with an investment of more than 10 million euros can get government subsidies." All kinds of subsidies together, the maximum subsidy can reach the amount of investment 50%. ”

According to statistics from the German Federal Ministry of Foreign Trade and Investment, Huaxia Happiness, a domestic industrial park developer, has also set up an office in Frankfurt, Germany, to work on the early site selection and design of the park.

Along with Chinese companies going out, China’s commercial banks have begun to expand globally. Along the famous street next to Milan’s cathedral, there’s the ICBC Milan branch. In Germany, ICBC opened the third in Munich in the autumn of 2011. Home branch.

Subcontracting: Globalization and Baotuan go overseas to set up factories to invest in more preferential taxation, land policy preferences reduce risk, and more Chinese companies are skillfully using global resources to organize their own supply chain system.

XCMG Europe Ltd. has invested 50 million Euros in the Europark Fichtenhain Business Park in Krefeld, Germany, in addition to the recently acquired German Schwing Company, setting up its first overseas R&D center. ZTE Corporation (000063.SZ) signed a memorandum of cooperation with Dresden University of Technology - first to develop core technologies such as Long Term Evolution (LTE) and Time Division Duplex (TDD) for mobile phones.

At the M&A level, Lenovo Group obtained the approval of the European Commission and acquired a majority stake in Aldi’s supplier Medion, which made it one of the top three in the German computer market and ripped a hole in the traditional leading markets of its major rivals Hewlett-Packard and Macro.

"Chinese companies must go out and they must have their own advantages. The simple example is that in 2010 Foxconn employees fell, but Samsung did not, a very important reason is Samsung's vertical integration advantages and The management is even more sophisticated than Foxconn.” Li Chengchun, deputy general manager of Samsung Electronics (Suzhou) Semiconductor Co., Ltd., told reporters that Samsung also has a lot of foundries in China, such as display screens, high-tech motors (making mobile phone vibration chips), logic chips, etc. The business not only supplies Samsung itself, but also supplies giants such as Apple. Its technology research and development and integration capabilities are sufficient to ensure its competitiveness.

"But Samsung did not relax the fine management of young production line employees." Li Chengchun analyzed that because of the obvious technological advantage, Samsung's production lines in each Chinese factory are highly automated, and the number of employees can be controlled as much as possible. About 3,000 people, and Foxconn's management of a factory area of ​​100,000 people, hundreds of thousands of people are difficult to manage together, far more than the number of people can imagine the increase.

"Therefore, if Chinese manufacturing is to go out, it must find its own competitive advantage that is particularly noticeable, and adjust the localization according to the national conditions of the target country. This will ensure the core competitiveness and ensure the ultimate success," said Li Chengchun.

The views of Li Chengchun and Xiang Wenbo and Alessandro Rosso coincide. Alessandro Rosso said: “All we see today is people who planned well. If they replicate today, they will fall behind and will not succeed. Companies with courage will only think more about the future.”