Chang Anan's "Chinese Characteristics": Long-term Merger and Reorganization


“After reorganization, it is trapped in the interests of local governments, state-owned enterprise management systems, and employee appeals. The link between Chang'an in China and Changhe and Hafei is still capital-linked. There is a lack of interaction and support between the brands, and the integration and improvement have little effect. Even Changhe has independently joined BAIC Group. Hafei has been trapped in the dilemma of “difficult corporate operations, increasingly serious losses, and 1200 layoffs”.

A few years ago, the young writer Han Han wrote a "Changan chaos," and the plot was so old that he had little punctuation.都 都 樘铮 樘铮 樘铮 樘铮 樘铮 嫖 氖 氖 氖 氖 氖 氖 氖 氖 郑 郑 郑 郑 郑 郑 郑 郑 郑 郑 郑 郑 郑 郑 摇 摇 摇 摇 摇 摇 摇 摇 摇 摇Picking up a lie?
Combined with the recent Hafei layoffs and the independence of Changhe last year, people will find that these four words are placed on China’s Changan Automobile Group Co., Ltd. (hereinafter referred to as China Chang’an), which ranks fourth in China’s auto group.

China Chang'an is the newly formed automobile group in 2009 when AVIC Automotive, a subsidiary of China National Aviation Industry Corporation, merged with China Changan Automobile Group (hereinafter referred to as Chang'an), a subsidiary of China North Industries Group Corporation. According to the agreement at the time, five companies, namely Changhe Automobile, Changhe Suzuki, Hafei Motors, Dongan Power, and Dongan Mitsubishi owned by AVIC Automotive, were merged into the China Changan Automobile Group, with a price of RMB 17 billion for 23% of the shares. This reorganization set two records at the time: the first case of reorganization of the assets of the central state-owned enterprises and the largest restructuring of the automobile industry in the country.

At the time, Xu Liuping, head of China Chang'an, was confident about the reorganization. He said that both companies have strong military backgrounds, which ensures that they can be more easily integrated into one company culture after reorganization. To this end, he set a goal for the reorganized China Changji: to reach 3 million capacity in 2012 and 5 million in 2020.

However, judging from the development of these four or five years, Li Fangyong, deputy general manager of AVIC, was even more predictable: “It's easy to enter a family, and it really needs a smooth process to become a real family. In the past, both parties were independent. Operational system, how the strategy is clear after the merger and how it can be turned into a rope will determine the ultimate success or failure of the reorganization."

After the reorganization, the interests of local governments, state-owned enterprise management systems, and employee appeals were entanglements. The links between Chang'an in China and Changhe and Hafei are still capital-linked. There is a lack of interaction and support between the brands, and the integration and improvement have little effect. Even as Changhe independently joined BAIC Group, Hafei was trapped in the dilemma of "business difficulties, increasing losses, and slashing 1,200 jobs."

Massing huge benefit when it comes to China Changan <br> <br> complex, long-term focus on the automotive industry knows it has a long history, the evolution of complex, large body mass.

With a long history, Chang'an, the main body of Chongqing, is an example. Its predecessor was the Shanghai Ship Artillery Bureau. The founder is the famous Li Hongzhang. It has a history of 150 years.

As for its huge volume, evidence can be found on the official website of Chang'an, China: China Chang'an has nine major vehicle production bases in Chongqing, Heilongjiang, Hebei, Jiangxi, Jiangsu, Anhui, Zhejiang, Guangdong, and Beijing, and 31 whole vehicles. The vehicle (engine) factory and 18 directly-affiliated companies cover mini vehicles, cars, passenger cars, school buses, heavy trucks, and special vehicles. The annual production capacity of vehicles and engines is 2.78 million units (sets).

This huge volume is mostly derived from the merger and reorganization in 2009. After the reorganization, how to use capital as a link to integrate its brands, establish good interaction and support, and “turn into a rope” is the key. However, the situation in the next five years is not the case.

Zhang Zhiyong, a senior analyst in the automotive industry, stated on April 2 that when he was interviewed by the China Industry News, the reporter said: “The merger and reorganization of Chang’an in 2009 combined Hafei and Changhe did not bring Changan an integrated upgrade. The three brands are still in their respective The independent development of the road. Such mergers and acquisitions encountered many problems, also led to the subsequent Changhe joined Beiqi independently.” Zhang Zhiyong analysis, China Changan in the integration process, the biggest problem encountered is that the plate is too large, the parties appealed for Differently, under the intertwining of various interests, it is difficult to make fundamental progress.

One important resistance is the intertwined interests of local businesses and local governments. “Taking Changhe Motors as an example, the biggest problem encountered by Chang’an was that the local government’s actions completely ignored the fact that Chang’an had the absolute controlling power of Changhe. Originally, Chang’an had all the problems that should be accounted for by Chang’an in China, but local governments passed Supporting local companies has delayed and obstructed such integration."

The reporter learned from public information that although China Chang'an is a central state-owned enterprise, Changhe Automobile's Changhe Automobile Co., Ltd. has the power of personnel appointment and removal, as well as the right of promotion.

In addition to the interests of local governments, "people" is also a big problem. After being reorganized by Changan, the employees of Changhe and Hafei still use the original management and workforce. They still retain the sentiments of the original company, and believe that Chang’an’s restructuring has “wrecked” them, and they are assigned to Chang’an. Management encounters confrontation and conflicts. A person familiar with Changhe told the China Industry News reporter: “Some Changhe old comrades are holding on and do not want Chang’an to manage Changhe.”

“There is also a strategic issue. Changan hopes to solve the problem of capacity through integration, or integrate existing resources, such as Changan Suzuki and Changhe Suzuki, while Changhe and Hafei want to quickly reverse the current difficulties in the short term. Pursue the maximization of revenue and benefits. The interests of everyone are completely different.” Zhang Zhiyong said.

The consensus of administrative will is hard to find In January 2012, Chang'an Group plans to transfer Changhe Suzuki's production qualifications to Changan Mazda for use. It was strongly resisted by Changhe Automobile and a sensational Changhe collective strike broke out. Subsequently, the Chang'an Group made a compromise and promised to maintain the current situation and development of Changhe Auto. Chang'an, the former manager of Changhe Motors, was evacuated and Changhe was granted “autonomy”.

"This kind of merger and acquisition is a waste of resources for Chang'an itself and for Hafei and Changhe. Chang'an started with the idea of ​​integrating forces between Changhe and Hafei. Now five years have passed and no new progress has been achieved. It obviously does not meet the purpose of promoting mergers and reorganizations at first," said Zhang Zhiyong.

Zhang Zhiyong believes that when a successful acquisition is initiated, it should be voluntary for both parties, not imposed by others. At that time Chang'an acquired Hafei and Changhe precisely in violation of this point.

Zhang Xiaoyu, vice chairman of the China Federation of Machinery Industry, once disclosed that Changan Group’s acquisition of Changhe Automobile was an administrative allocation led by the SASAC of the State Council. It is not the willingness of both parties: Chang’an Group has its own sound layout and is unwilling to reorganize Changhe, which has suffered years of losses. Cars, and Changhe Automobile also hopes to develop independently.

Jia Xinguang, a well-known automotive analyst, also told the China Industry News reporter that at that time, CNAC wanted to concentrate on making big planes and dumped its auto business as a baggage to Chang'an. It did not consider whether Chang'an is suitable for Changhe and Hafei. “There is no problem in Chang’an. Mergers and reorganizations are the will of the government. After the reorganization, they are again resisted by the local government and staff. There is no way to truly take over Changhe and Hafei.”

This kind of government merger and reorganization led directly to the lack of consensus and trust between the parent company China Changan and its subsidiaries Changhe and Hafei. In some key issues such as Changhe Suzuki’s sedan qualification, Hafei and PSA's joint venture project and Shenzhen base, many employees of Changhe and Hafei believe that this is Chang'an to “predatory” the resources and development opportunities they have, which further raises questions about the parent company’s The decision has even led to such violent mass incidents as “strikes”. Chang'an has its own reasons?

Contrary to what Jia Xinguang considered, "Chang'an has no way of saying hardships," another view is that China's Changan has a strategic bias arising from "egoism" in the integration of Changhe and Hafei. Some analysts pointed out that "Changan only integrates Hafei in accordance with its own will, rather than planning its products and layout according to changes in market demand."

Let's take a look at Changhe. Before Changhe became independent, production and sales continued to fall. In addition to micro-cars, only Changhe Suzuki's Big Dipper, Paixi, and Liane’s three passenger vehicles were all small vehicles under 100,000 yuan. Changan, China, did not provide new model support after accepting Changhe. Some people analyzed that Changan’s independent research and development capabilities have caused it to fail to provide new models, but some speculated that the overlap between the two markets in which the products were located caused China’s Chang’an to give up her car and was unwilling to provide vehicle support for Changhe Automobile. Today, Changhe Hefei Base, which is categorized as China Chang'an, has been used as a Changan brand passenger car production base.

Look again at Hafei. According to media reports, in the two production lines owned by Hafei, the “old line” for the production of vans has been shut down for a long time. The car production line built in 2000 to produce Hafei Saibao 3, horse racing, and road treasures was being built. Chang'an Yuexiang V3.In 2013, this production line produced Yueyun V37.75 million units, an increase of 209.58% year-on-year.

The reporter learned that, except for Rui Xin, all autonomous passenger cars in China's Chang'an are produced at the Chongqing plant. In 2013, Changan Automobile sold 380,000 vehicles, which has reached the limit of the factory's capacity. This year, Changan’s own-brand car sales target is 600,000 units, which is 50% higher than last year. This capacity gap may be transferred to Hefei Changan and Hafei Automobile.

From the point of view of mergers and reorganizations, it is understandable that Hafei and Changhe Hefei Base will become their own foundries. After all, China Changan is the parent company and has overall consideration of the right to integrate its resources. However, facing subsidiaries with complex interests and a group of employees who have deep feelings for the original company, China Changan should learn how Volkswagen’s acquisition of Skoda – providing technical, financial, etc. support, for them to develop their own brand The car, while importing advanced management concepts into Skoda, constantly upgrades and transforms senior products, and creates a differentiated brand image, so that Changan, China can achieve "long-term stability."



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