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The reporter learned from the China Internal Combustion Engine Industry Association on August 15th that the German ThyssenKrupp's acquisition of the Shandong Crankshaft Plant has been approved by the relevant departments in Shandong Province.
According to the survey, the local government of Shandong Province had problems with the operation of the application for the joint venture of the company's application for the joint venture between the company's Shanqu Plant and the multinational company ThyssenKrupp.
In order to circumvent the unified approval of the relevant state departments, the project will split the original planned total investment of 180 million U.S. dollars to 95 million U.S. dollars, and the 72 million U.S. dollars of registered capital to 40 million U.S. dollars.
The joint venture between the pioneer company Sanqu Plant and ThyssenKrupp has attracted high attention in the industry. Mr. He Guangyuan, former Minister of Machinery Industry and Honorary Chairman of China National Internal Combustion Engine Industry Association, was very upset after learning about the incident. He pointed out that such leading enterprises should be controlled by foreign parties. In the future, more than 50% of the crankshaft market share of crankshafts for automobiles, construction machinery, and military engines in China will be controlled by the German side. Obviously, this is not conducive to the development and independent innovation of China's internal combustion engine industry and the supporting industries such as automobiles and construction machinery.
The China National Internal Combustion Engine Industry Association also made it clear that the crankshaft is an important part of the engine to withstand impact loads and transmit power, and is the key component of the engine as well as the oil pump nozzle. After the Chinese internal combustion engine industry lost its right to speak of the development of high-end fuel injection systems, it did not want to see similar situations. If we lose the autonomy of crankshaft development, it will seriously affect the independent innovation and sustainable development of the internal combustion engine industry.
In the China Internal Combustion Engine Industry Association’s report submitted to the National Development and Reform Commission, the reporter noticed that there was such a paragraph of text --
Shandong Crankshaft Plant and its subsidiary Tianrun Crankshaft Co., Ltd. is currently the largest crankshaft crankshaft manufacturer in China. Its products are supplied to domestic large-scale diesel engine plants such as Weichai, FAW-Dachai, Dongfeng Cummins, Shangchai and Yuchai. In addition to the supporting products for heavy trucks, construction machinery, but also with the host for the domestic military products. The company's product quantity ranks first in the country, and its equipment level and technological equipment are also in the leading position in the domestic industry, and are basically in line with international standards.
According to the reporter’s understanding, the Shanqu Plant is a leading enterprise in the domestic internal combustion engine industry and accessories industry, and has an internationally advanced level of crankshaft production lines, with an annual output of more than 500,000 crankshafts of various types. In 2005, the market share of large and medium-sized construction machinery engines in the domestic market At 65%, the market share of heavy commercial vehicle engines is more than 50%. The National Crankshaft Technical Center was established at the Yamagata Plant.
This is an industry leading company. On January 6, 2006, it signed an asset purchase agreement with Germany's ThyssenKrupp. It is understood that the project has a total investment of 180 million U.S. dollars, registered capital of 72 million U.S. dollars, and ThyssenKrupp AG accounts for 80% of the shares. The major product development and major equipment of Shanqu General Plant and its subordinate Tianrun Company entered the joint venture.
In April 2006, the joint venture scheme was reported to the Ministry of Commerce; in May it was explicitly informed that it would not be approved. Because China's "Approval Procedures for Foreign Investment Projects" specifically stipulates the authority for central and local authorities to approve foreign investment, which provides for permission to invest more than US $ 100 million in projects approved by the National Development and Reform Commission; and below 100 million US dollars is approved by the local Development and Reform Commission.
After the Ministry of Commerce was stopped for submission, the "State Council's Several Opinions on Accelerating the Revitalization of the Equipment Manufacturing Industry" was formally introduced, clearly stating that when a large-scale key-equipment manufacturing enterprise's controlling share is transferred to foreign capital, it shall solicit opinions from the relevant departments of the State Council and point out that The 16 key areas for the development of equipment manufacturing industry, of which Article 7 involves high-power diesel engines and other ancillary equipment. In early August, the local government of Shandong Province sent someone to the China Internal Combustion Engine Industry Association to exchange opinions on the project. The China Internal Combustion Engine Industry Association made it clear that it disagreed with the merger and acquisition plan of the Yamagata Plant and ThyssenKrupp.
The "Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors" issued by the six ministries and commissions of the Ministry of Commerce will begin implementation on September 8. In accordance with this new rule, mergers and acquisitions of vanguard companies, such as products with a market share of more than 50%, such as the Yamagata Plant, will be subject to strict review and evaluation. To this end, the China Internal Combustion Engine Industry Association recommends that experts should be organized to fully demonstrate the joint venture project of the Yamagata Plant so as to provide sufficient approval and reference for the national government functional departments.
It is precisely in this context that local governments in Shandong province are in full swing, assaulting and shutting down, and operating in violation of regulations—in a way that splits the total investment in joint ventures, the rate of dismantling of joint ventures is reduced to zero, so as to bypass national approvals and approve local approvals. Within the scope of powers, it must be resolved first; at the same time, before the implementation of the "Regulations on M & A of Domestic Enterprises by Foreign Investors", the purpose of establishing the project first and then increasing the capital will be achieved.
At present, the ThyssenKrupp merger and acquisition of Shanqu has been initiated. Once it enters into substantive operations, the German company will complete the second capital increase and the entire situation will not be reversed.