On 27 December, the National Development and Reform Commission (NDRC) issued the latest issue of the Special Administrative Measures for Foreign Investment Access (2021 Edition). It is once again clear that from January 1, 2022, the foreign ownership restriction on passenger car manufacturing will be abolished, and the restriction that the same foreign company can only establish two joint ventures will be relaxed.
Regarding the liberalization of the joint venture share ratio, there has always been considerable controversy. Some people feel that it can change the situation of domestic auto companies "lying" to make money, forcing them to improve their research and development capabilities; others feel that this is a disaster for the domestic automotive industry, which means the failure of the market to change technology for many years.
In the past six months, as the time for the opening of the stock ratio is approaching, there have been more and more rumors, and disputes and wars of words have overflowed.
But what I never expected was that the result of the "first case" had two major surprises: the first "response" to the policy change was a new energy vehicle company, and the second was that the shareholders of both sides were happy.
Last week, BYD and Daimler announced the distribution of their joint venture, Denza, with BYD increasing its stake to 90% and Mercedes-Benz reducing its stake to 10%, and expecting to complete the equity transfer in the first half of 2022. The key is that the atmosphere of negotiation between the two sides is still very harmonious, and there is no tension between other joint ventures.
What does IT MEAN by ADDING SHARES? What new atmosphere will it bring to the liberalization of the joint venture share ratio?
"Alternative" joint ventures, what is the origin of Denza?
Before talking about Denza, let's talk about the status of domestic joint venture automobile companies. Since October 1984, when SAIC Volkswagen signed a contract and laid the foundation stone, foreign auto companies began to enter China in the form of joint ventures.
At that time, the domestic automobile technology can be said to be poor and white, and the basic cooperation method is relatively fixed, foreign companies produce technology, Chinese-funded companies produce people and venues, and everyone builds factories together. Although the shares are 50% each, to be honest, most of the technology is contributed by foreign companies. For example, we are familiar with the North and South Volkswagen, north and south Toyota, these are all like this.
Slowly, as the market changed, subtle changes occurred within the joint venture. There are foreign direct integration into the country, the most typical is SAIC-GM, the joint venture of the Pan-Asia Technology Center has even completed the design of many GM global models. The two also acquired Wuling and operated well. I am afraid that many people cannot imagine that such a national brand as Wuling is essentially a joint venture company. There are also those who perform their respective duties and contribute together, the most typical of which is Guangfeng and Guangben.
But more than that, the Chinese company has directly lost its right to speak. The more typical ones are BMW Brilliance and Beijing Benz, both of which are typical of strong foreign capital and weak Chinese capital. Brilliance has long handed over the financial rights and operating rights to BMW, and it has almost determined that BMW will increase its capital to 75%. BAIC is more special, although it has little say in technology, but it firmly controls the right to operate. Recently, the news came out that BAIC has surpassed Geely and become the largest shareholder of Daimler, the parent company of Mercedes-Benz, and I am afraid that Mercedes-Benz will not move its mind in the short term.
Denza is actually different from them. The original intention of this brand definition is to create a brand that combines Mercedes-Benz's rich vehicle manufacturing experience and BYD's mature Sandian technology. To put it simply, Mercedes-Benz is responsible for the appearance and interior design, AND ISD is responsible for the design of the battery and power system, in fact, the core part is still done by BYD. This is the biggest difference between it and other joint ventures.
However, this new type of joint venture has not been recognized by the market. Because Denza's positioning is high-end, but it does not have the brand appeal of Mercedes-Benz, it has been tepid, but it can also be regarded as an industrial attempt.
What is BYD's intention to increase its shares, and why does Mercedes-Benz gladly accept it?
In recent years, the rapid rise of new energy vehicles in China and the world, according to the good card of deforestation should take advantage of the momentum to take off, but the actual situation is not the case.
In fact, new forces like Wei Xiaoli who position themselves at the high end have risen, and Denza has been tepid, mainly because of the 50:50 share ratio restrictions, Mercedes-Benz and BYD do not want to contribute more to "cheap" each other.
Nowadays, BYD is impacting the high-end. Denza has been operating for so many years, and it has a certain degree of popularity and the endorsement of Mercedes-Benz. Compared with building a high-end brand from scratch, it is also a good choice to directly borrow the Denza brand.
According to the latest news, after the success of the share increase, BYD will dominate Denza in the next two years, launching three new models, mainly MPV and SUVs. Technically, BYD's latest DM-p and DM-i technologies will be used, and it will also be equipped with the latest e-platform 3.0.
Kung Fu Auto expects that with the current appeal of BYD, there should be something to do.
As for the Mercedes-Benz side, it should also gladly accept this proposal.
Because the Denza brand itself does not make money, if BYD can make it, even if it is only 10%, it is good.
In addition, Denza is a pure new energy brand, and every time it sells a car, it can get a certain amount of new energy credits. Mercedes-Benz, as a member of the joint venture, can share part of the points, which can "subsidize" Mercedes-Benz's fuel sequence to some extent.
Of course, it still has to be mentioned that Mercedes-Benz and BYD did not do a good job, in fact, it is unjust. Looking at the interior of denza X, how can it be said that Mercedes-Benz is not involved? It's just that the deforestation brand appeared a bit untimely, and everyone's acceptance of luxury brand electric vehicles has been relatively confused, and it can't hang up the Mercedes-Benz logo.
Now, BYD to take over most of its management rights, there should be a relatively large development.
The liberalization of the joint venture share ratio will become a catalyst for China's automotive industry?
In most joint ventures, the share ratio is actually a very sensitive issue. In addition to BMW Brilliance and Beijing Benz, there are actually many companies that are eager to move. But after all these years of cooperation, it is somewhat unfriendly to mention this topic.
But the negotiations between BYD and Mercedes-Benz are still relatively smooth, one is that Denza is indeed not as high as the value of BMW Brilliance, which has annual profits of several billions; second, both sides have core technologies and are not stuck in the neck of each other.
In fact, with the liberalization of the joint venture share ratio, the cooperation method will become more diversified. For example, toyota has established a joint venture with BYD before, and Toyota recently released an electric vehicle matrix, which includes the models of Bifeng's cooperation. Like Denza, it also uses BYD Sanejeon technology, but it is said that it will use Toyota's latest eTNGA architecture.
For another example, the cooperation project between Great Wall and BMW is also being promoted, and the two sides will cooperate in the production of an electric version of MINI, and may also promote the domestic production of MINI in the form of a joint venture.
As for the proportion of joint ventures between the two sides, in fact, it can become very flexible, more effort to take more, less to take less, do not have to fix each half, in fact, more reasonable.
In fact, as early as 2014, Geely CEO Li Shufu expressed his views on the issue of the liberalization of the joint venture share ratio. He stressed that only when the stock ratio is liberalized, the automotive industry will have a level playing field. The essence of the joint venture is actually that state-owned enterprises and foreign capital are grouped together and compete with civilian enterprises, which essentially squeezes the development of the domestic automobile industry.
Once the stock ratio is liberalized, the market will be more rationalized, and the price of cars will be lower than in the international market, because of the low production cost in China. Ordinary people can get more benefits.
Kung Fu shoots
The liberalization of the joint venture share ratio will gradually fade out of the stage for car companies that have no core research and development technology and no core competitiveness. For enterprises with core technologies and their own characteristic products, it is actually an opportunity, and they will gain a larger market.
The diversification of joint venture methods is also a good thing for consumers, after all, they must change their methods to "please" consumers, and finally everyone votes with their feet to select better companies.
In 2022, the joint venture share ratio will be liberalized, and in the era of electrification, this seems to have become a bit uneventful again.