There is another reason why Feng Yu had e to Shanghai. Li Mingde is attending a meeting here. China’s Automobile industry’s development forum.
Shanghai Automotive Industry Corporation (SAIC) had bee the host of this forum, and this made Li Mingde mad.
How can SAIC pete with Bing City Machinery pany? Our branding, sales, profits are all higher than SAIC, and just because we are also manufacturing agricultural machinery and motorcycles, we are overlooked?
Another reason for not letting Bing City Machinery pany host this forum is because of fierce petition with First Automobile Works (FAW).
At night, Li Mingde and Feng Yu are in Feng Yu’s hotel suite drinking.
“Hmph! Does SAIC dare to say us?! They are also joint ventures too. Although we are a joint venture pany, we are using Hong Kong’s funds, and our management and employees own the pany’s shares. We should be the ones that represent a collective enterprise!” Li Mingde grumbled.
During the meeting, SAIC’s Chairman said Bing City Machinery pany’s structure is a serious problem. The state is not the main shareholder, and he used this reason to make fun of Li Mingde.
SAIC’s Chairman even said that it is a mistake to let Li Mingde owns the pany’s share.
What’s wrong with me holding on to the pany’s shares? The shares are a reward from the pany for my contributions. Bing City Machinery pany had grown from a small local factory to a country-wide renowned factory, and I had made significant contributions. If not, why would the board of directors reward me with the pany’s shares?
SAIC’s Chairman, Manager Niu, is being jealous!
“Old Li, why are you angry with them? They had surpassed us in terms of sales because they lowered the prices of Volkswagen Santana last year. What’s there to be proud of? If we include our overseas sales, we are still number one.”
There are seven automobile manufacturers in China, and Bing City Machinery pany is still the strongest. The production sales for the smaller cars category last year is more than 100,000 units, and SAIC is only around 80,000 units.
Also, you can ask the people on the streets, which automobile brand they prefer, Songjiang Motors or SAIC?
“This year, the other automobile manufacturer will be bringing new models and had gotten better terms from their overseas partners. How cant they get such lucrative terms if we did not exceed them with our technologies?”
Because of the appearance of Songjiang Motors, China’s automobile industry had grown bigger, and the other automobile manufacturers started developing their technologies, making breakthroughs.
But China’s overall automobile technology is still behind overseas panies, Bing City Machinery pany is also the same. There is still a gap pared to the manufacturers in Japan and the Western countries.
For example, the engine, chassis, etc. technologies newly developed by Bing City Machinery panies are equivalent to overseas manufacturers’ old technologies.
The gap between both sides is closing, and this is because of the rise of Bing City Machinery pany.
Initially, when those overseas automobile panies got into a joint venture with China’s state-owned automobile panies, the overseas pany did not share most of their advanced technologies with China.
In a way, the overseas panies’ are holding back China’s development and controlling their growth. These joint venture panies ended up as spare parts manufacturers for them.
But it is different now. The overseas automobile panies’ brands are being threatened in China. They thought they had controlled the Chinese automobile market, but the most popular automobile brand now is China’s domestic brand, Songjiang Motors!
All automobile manufacturers in China are developing much faster than expected. Their progress is already one year ahead of the overseas manufacturers’ expectations.
China had set the automobile manufacturing industry as one of its core industries and will invest money to build it. At the same time, the government will impose high tariffs and limitations on the importation of cars.
The overseas automobile manufacturers can only continue to work with China’s manufacturers and share their newer models and technologies to secure the market.
But during the negotiations, the overseas manufacturers noticed the Chinese panies’ change of attitude.
In the past, the overseas panies will have the upper hand during the negotiations, and the other party will agree to their harsh terms for their technologies.
But now, the Chinese panies rejected all their conditions for cooperation!
The Chinese panies had agreed to enter into a joint venture with overseas manufacturers is because they needed new technologies. But since then, Chinese panies had gotten the technologies and developed their own. Although the newer technologies from overseas are better than Songjiang Motors, they are only slightly better.
Songjiang Motors will also be introducing a newer model of cars, and what if their technologies are better than the technologies given by overseas manufacturers?
Paying the overseas panies a large amount of money for new models, but the new cars are not better than Songjiang Motors? They will suffer massive losses. Even the State-owned manufacturers will not agree, let alone the leaders above them.
So, the Chinese automobile panies changed their attitude towards their overseas partners. We had given you 49% of the pany’s shares previously. But now, we will only let you own 30% at most, and you all must pay a premium for the shares.
That’s right. Your technologies might worth a lot, but those are not the most advanced technologies. If you all don’t agree, we will work with Songjiang Motors. After all, they are also Chinese, and we can get better deals from them.
This is the Chinese panies’ trump card. We have technologies slightly behind you all in China now. But who knows if Songjiang Motors have developed more advanced technologies?
Those overseas panies realized that the Chinese automobile industry had changed, and it was not the same as before. SAIC told their overseas partners. Look, this A6 model is similar to Songjiang Olympics model. Although the specs of A6 are slightly better than Songjiang Olympics, others might think we are imitating them.
Audi had not expected to hear such ments about a two-year-old model, and they panicked when they saw SAIC speaking to other overseas automobile panies. Audi immediately lowers their requirement. In the end, they can only get 25% of the new model’s profits and had to pay double what they expected.
Initially, Audi had wanted 49% shares and even tried to get 50%. But in the end, they were forced to lower it to 25%!
After Audi signed the contract with SAIC, the rest of the Chinese manufacturers used this deal as the benchmark against their partners.
The highest percentage gotten by overseas panies for new joint-ventured vehicles is only 30%. This is a vast difference, and it symbolized China’s automobile industry had reached another phase!
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