Free Trade Zone Pushes Auto Parts International Financing Platform

Free Trade Zone Pushes Auto Parts International Financing Platform


Shanghai Automotive Group Co., Ltd. (hereinafter referred to as the SAIC Group), a component company controlled by Huayu Automotive Systems Co., Ltd. (hereinafter referred to as Huayu Automotive), has released a news report that its wholly-owned subsidiary Yanfeng Automotive Trim Systems Co., Ltd. ( (hereinafter referred to as Yanfeng) and the United States Johnson Controls Inc. (hereinafter referred to as Johnson Controls) have signed a global cooperation framework agreement for automotive interiors in Shanghai. The two parties intend to establish a joint venture company for automobile interiors in the Shanghai Free Trade Zone to expedite their parts and components. The "sea" of the product.

“Compared to the enterprises outside the region, the free trade zone can provide enterprises with a better platform to reduce operating costs and provide companies with international investment and financing,” said a person who has long been concerned about the development of the free trade zone policy.

In recent years, with the overseas deployment of auto companies speeding up, local companies have seen overseas mergers and acquisitions and investments become commonplace. The investment model has changed from a simple trade model to a brand export model. Under this background, flexible policy support is obviously more favorable to the expansion of the company. .

Two percent expected to reduce operating costs <br> <br> accordance with the above agreement, Yanfeng new joint venture company will hold a 70 percent stake, while Johnson Controls 30% of the shares are held. “At present, the main customers of Yanfeng are Shanghai Volkswagen, Shanghai GM, Dongfeng Nissan, etc. Johnson Controls' customers are BMW, Mercedes-Benz, and Ford,” said Zhang Haitao, general manager of Huayu Automotive. The new joint venture will help Huashi Automotive. Into the supporting fields of high-end brands such as BMW and Mercedes-Benz. At the same time, after the joint venture between the two parties, Yanfeng's products can enter overseas markets through the existing channels and layout of Johnson Controls.

With the acceleration of the globalization of auto companies, the requirements for parts and components companies have also been further enhanced. "Not only must have the ability to participate in global research and development, but also must have the ability to supply the world. Auto parts companies do not have the property of 'globalization' and can only become a foundry," Zhang Haitao said.

In the eyes of people in the industry, parts and components companies must possess the attributes of globalization. Besides the globalization of product research and development, the global service capability and convenience of back-office services are crucial. In this context, the settlement of the free trade zone is undoubtedly conducive to the start of its globalization path.

“Compared with the outside of the region, enterprises in the FTZ will be more convenient in importing and exporting procedures. For instance, customs clearance will have quick exits and exits similar to those of the green channel, which will help improve the efficiency of the company,” said Tian Yongqiu, an automotive analyst. At the same time, in terms of interest rates on taxation and financing loans, policies in the FTA are all more generous.

According to the data released by the SAIC Group before this, according to current policy forecasts, Shanghai Automotive International Trading Co., Ltd., which was established in the Free Trade Zone, could reduce the Group's international trading business by more than 20% in capital, trade, transportation and warehousing costs.

This is obviously a great attraction for parts companies that are currently making thin profits. According to Tian Yongqiu, an analyst of the automobile industry, “As there is no limit on the joint venture ratio of domestic parts and components companies, in the current market, the more lucrative plates are basically controlled by Bosch, BorgWarner and other foreign companies. Corporate profitability is relatively weak. Therefore, in the market competition, the control of costs becomes extremely important."

Overseas investment show flexibility <br> <br> of SAIC and Chinese domain car, settled FTA reduce operating costs, but also help enhance the flexibility in addition to overseas investment. "From the current point of view, with the development of domestic vehicles and parts companies, 'going out' has become a major trend, followed by overseas mergers and investments will become more frequent in the future." Tian Yongqiu thinks .

"As car companies accelerate the expansion of overseas markets, the model of car manufacturers' exports has also shifted from the previous trade model to the export of brands." Cui Dongshu, deputy secretary-general of the National Federation of Chessmen, said that the difference between brand output and trade output is that The investment and marketing decisions made by the exporter are more determined by local partners, and by the time the brand is exported, the scale of investment and the direction of marketing are all set by the car companies. In this process, the continuity and flexibility of investment are particularly important.

“From the information that has been disclosed so far, it can be seen that the Free Trade Zone's foreign exchange, foreign exchange exchange, foreign exchange settlement procedures, and quotas are all more flexible than those outside the zone,” said Zhang Zhiyong, an automotive analyst.

According to Tian Yongqiu, “it has been hoped that the overseas trade mergers and acquisitions of the foreign trade zone will not be further relaxed. For example, companies involved in overseas mergers and acquisitions exceeding US$100 million need to be reviewed and approved by the relevant departments such as the Ministry of Industry and Information Technology and the National Development and Reform Commission. Enterprises that implement mergers and acquisitions, as long as they do not exceed 1 billion U.S. dollars, generally only need to record. According to the characteristics of the Free Trade Zone, the future restrictions on such review are expected to be further relaxed.”

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