[Repost] Exclusive analysis: The secrets of the game of joint ventures in China's auto industry

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[Repost] Exclusive analysis: The secrets of the game of joint ventures in China's auto industry [Copy link]

As we all know, the national policy has not supported the automobile industry since 2006. Facing the entry into the WTO, will the automobile industry wait passively or take the initiative or develop beyond the norm? Where is the direction of development?

　　The most urgent task is to change the situation of the automobile industry fighting alone and form a joint venture game. However, the business world is dangerous and treads on thin ice. Looking back at history, there are only a few companies that are still making waves.

　　In the 1980s, multinational automobile companies formed joint ventures one after another, and the way of cooperation developed rapidly and effectively, becoming an important model and corporate organization model for today's economic globalization.

　　Why is it that many Chinese automakers are still fighting alone? Why is it difficult to establish a global vision? There are many reasons. Macroeconomic regulation is not yet so comprehensive. For example, our auto industry must start with enhancing its competitiveness and occupying market share, so that it can integrate into the mainstream of economic development.

　　Our Chinese auto industry needs to develop with the help of the macro background, such as the monopoly of the stock market. In order to seize the world, it has spared no effort to build a network across the country and vigorously seek joint venture partners. Its purpose is to turn itself into a powerful industry value-added value chain, to make itself stronger and bigger, and to make it rise gradually.

　　Even if we want to make ourselves bigger and stronger, in our automobile industry, joint venture credit is very important. First of all, we need to establish a mutual trust and cooperate on the basis of mutual understanding, so that we can give full play to our strengths. A good example: recently, Germany's MAN and Shaanxi Automobile finally broke up on the engine project. Cummins, the largest foreign investor in China's diesel engine industry, replaced MAN and entered Xi'an.

　　What does this example teach us about the automotive industry? It shows that we need to build a platform of mutual trust and shared interests and a reliable network of relationships. We need to understand that the market economy is open, competitive, and legal, and that awareness allows people to compete. Trust is also a cultural concept of joint ventures, otherwise we will lose many opportunities.

　　Why do some multinational auto giants continue to thrive in China? One of the important reasons is that they abide by business reputation and recognized ethical standards, pay attention to their own corporate image, and regard their own companies as symbols of value and competition.

　　Secondly, if we want to be like Germany's MAN and Shaanxi Automobile, it will be difficult to integrate resources. To integrate resources, our Chinese automobile companies should pay attention to some issues. For example, planning and positioning, mergers and reorganizations, mutual shareholding and holding, joint venture operations, etc. are very important. In these processes, if you want to create an excellent brand, you must use joint ventures between strong entrepreneurs to occupy the market, so that it can last for a long time and have a strong life.

　　Secondly, our Chinese auto industry must identify its own brand and develop its own brand. A brand is like a person's clothes. There was a saying that goes, "A man is a man, and his clothes make him great." Therefore, it is important to know the brand, attach importance to the brand, and develop its own brand unremittingly.

　　Zhejiang Geely Holding Group Co., Ltd. is the earliest private automobile company in China. After seven years of development, it has now become a member of the "3+6" mainstream structure of domestic automobile companies, with economy cars such as Haoqing and Meiri; mid-size cars such as Maple and Free Cruiser; and a series of well-known brands of urban sports cars such as the Beauty Leopard.

　　Geely has been moving towards the goal of internationalization. On the one hand, it has carried out technical cooperation with international automobile giants such as Daewoo International Co., Ltd. of South Korea, Luke Company of Germany, and Automotive Project Group of Italy. On the other hand, it has actively explored the international market. In 2004, Geely Automobile successfully exported 5,000 vehicles to more than 30 countries and regions. In order to move towards the international platform faster, Geely has actively cooperated with Hong Kong Guorun Group since April 2003 to promote the listing of Geely Automobile in Hong Kong.

　　Why is Geely so good at playing the capital game? Geely's idea is to always create its own brand in international operations. It does not simply pursue exports, but pursues exports to create brands. Geely realizes that as long as Geely's brand enters the Malaysian market and stands firm, and then takes root, there will be no worries about generating more foreign exchange. This is the mantra of Geely's Vice President Li Shu.

　　Although it is just an orthodox path for a grassroots hero, Geely is indeed flying fast. So our auto industry should know that a joint venture is between an independent enterprise and a market transaction. It has no centralized authority control, and it is not a transaction in the market where money is exchanged for goods. It just forms a relatively stable and long-term contractual relationship in R&D, production, sales, etc.

　　Under such circumstances, our auto industry must learn to put eggs in multiple baskets instead of just one basket. If you accidentally fall down with this basket and the eggs break, there is still another basket of eggs. From a certain perspective, joint ventures between peers are either to reduce risks or to gain monopoly. There are also joint ventures between upstream and downstream companies, such as Intel and computer manufacturers.

　　In other words, the strong and weak joining forces in the auto industry is not a good thing. Have you heard of the story of "a group of small animals fighting a big zebra"? This story is about a group of small animals uniting together, some grabbing the head of the big animal, some grabbing the ears, and some grabbing the back. This story is enough to show us that small companies are capable, and it tells us a profound truth. It is best not to join forces with the strong in a joint venture.

　　Joint ventures are a dynamic issue. They are like a marriage, which will change with the changing environment. Moreover, joint ventures must be greater than 1+1 and must generate extra value. However, when the pie of a joint venture becomes bigger, there will be a question of how to divide the pie. Unequal benefits will cause problems. Joint ventures are easy to collapse in various profit conflicts. Therefore, corporate culture, reputation, and image are very important. For example, take our old state-owned enterprises. Its parties or managers cannot directly benefit from joint ventures. Instead, joint ventures may form power restrictions.

　　Therefore, if our Chinese auto industry wants to get a share of the pie in the joint venture, then it should conduct a good cost-benefit analysis before the joint venture, calculate the other party's costs and then its own costs and financing issues. Don't always think about your own mentality, but also consider your partners. It is very important to analyze which joint venture is effective and which is ineffective, whether to share a brand or to open up a market first, etc.