CHINA'S DOMINATION OVER WORLD CAR INDUSTRY IS THE COMING NEW TREND (Calvin Tan)



China Aims to Take Over Car Industry, One Part at a Time

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7-18-17 5:44 AM EDT | Email Article

By Trefor Moss

More workers in the global auto industry are relying on Chinese companies to sign their paychecks these days.


China-based businesses have been sinking money into various automotive operations -- from glass and tire makers to technology developers and car makers -- for several years, reflecting Beijing's goal of eventually dominating the world's car business.

That effort accelerated during the first half of 2017, with eight overseas deals totaling more than $5.5 billion in Chinese investments, compared to nine investments for all of last year.

The list includes the takeover of troubled Japanese air bag maker Takata Corp., the purchase of a flying-car developer and the acquisition of a sizable stake in Tesla Inc. by gaming and social media giant Tencent Holding Ltd.

China's overseas auto-industry investments -- more than $34 billion since 2008 -- have come in spite of a broad government clampdown on foreign acquisitions.

That reflects two factors, according to Michael Dunne, president of Dunne Automotive, an advisory firm. One is that Chinese automotive companies, unlike their peers in other sectors such as entertainment, have picked their targets carefully and secured good value for the money, he said.

The other is that the automotive sector clearly has government support at the highest levels to take a commanding position in the global market, he said.

"There is no question their ambition is to be No. 1," said Mr. Dunne. He likened the approach to the ancient Chinese game of Go "where you gradually encircle your opponent by taking strategic assets."

In many cases, Chinese companies are doing this by acquiring parts suppliers and small car makers, or setting up joint ventures on foreign soil. U.S. assets have been high on China's shopping list.

Zhejiang Geely Holding Group Co. is investing $500 million to build a Volvo plant that will employ 2,000 people in Ridgeville S.C., for example, while auto-glass producer Fuyao Glass Industry Group Co. has spent $1 billion on U.S. manufacturing facilities, including reopening a former General Motors Co. plant in Moraine, Ohio, that will employ 2,500.

Among the eight deals chalked up in the first half of 2017 was Ningbo Joyson Electronic Corp.'s deal last month for bankrupt air-bag maker Takata. If finalized, the $1.59 billion purchase will be Ningbo Joyson's fourth in two years -- a streak that included last year's $920 million acquisition of Michigan-based Key Safety Systems Inc., maker of air bags and other auto-safety equipment.

Beijing has given vehicle-industry firms free rein to expand even as it tamps down acquisitions in other sectors, said Chen Yang, Ningbo Joyson's communications director, underscoring the car sector's strategic value to Chinese policy makers.

"We have had a lot of support from the relevant government departments," said Mr. Chen. "You can't do overseas acquisitions without government support."

Geely is the most active Chinese car manufacturers in terms of foreign takeovers. It bought struggling Malaysian auto maker Proton along with its Lotus Cars unit for $235 million in March, before acquiring U.S. flying-car start-up Terrafugia in June for an undisclosed fee.

Geely's 2010 acquisition and subsequent turnaround of Volvo Cars, previously a money-losing unit of Ford Motor Co., is often cited as the most successful example of a Chinese auto acquisition to date: as well as reviving the Swedish brand, Geely used Volvo's technology to upgrade its own product lines.

Geely's absorption of foreign technology and knowhow has put it "in a class by itself" among Chinese auto makers, according to Mr. Dunne, vindicating acquisitions that industry analysts initially questioned.

Other Chinese buyers have preferred to take strategic stakes in foreign vehicle makers rather than make outright purchases, as when Tencent Holdings Ltd. spent $1.8 billion on a 5% stake in Tesla in March.

China National Chemical Corp.'s $7.86 billion purchase of Italian tire maker Pirelli in 2015 remains the biggest Chinese auto-sector foray to date. The nation's largest supplier to auto makers, Wanxiang Group, is also a major player, claiming a 12% share of the international car-parts market outside China.

Mr. Chen of Ningbo Joyson said Chinese auto suppliers are still closing the gap on world leaders such as Germany's Robert Bosch GmbH and Japan's Denso Corp., some of which have been offloading surplus units to Chinese buyers as they themselves move into more high-tech fields thought to represent the future of the car business, such as automation and connectivity.

Bosch, for example, sold its starter-motor division to Zhengzhou Coal Mining Machinery Group Co. in May.

Ningbo Joyson, however, is investing in cutting-edge technology rather than assets that Western rivals no longer want, but is still playing catch-up, Mr. Chen said. "China does not yet have one single world-class auto company," he said.

Chinese companies that are doubling down on specific sub-sectors of the auto-parts market may have a best chance of securing global dominance than those aiming to diversify, said Robin Zhu, an auto analyst at Bernstein Research.

Ningbo Joyson's acquisition of Key Systems and Takata will make it a top-three global player in the vehicle safety segment, provided it can successfully stitch its various units together, he said, while auto-glass maker Fuyao, car trim maker Minth Group and vehicle interior supplier Yanfeng are among the other Chinese suppliers in growing command of their specialty.

Yet even as China's auto industry racks up overseas purchases, it remains behind overall, Mr. Zhu said: "I don't think we'll see a Chinese Bosch anytime soon."

--Lilian Lin in Beijing contributed to this article.

Write to Trefor Moss at Trefor.Moss@wsj.com



(END) Dow Jones Newswire



Calvin comments:



The sudden surge of IWcity was due to Wanda being put under restrain in China. As Wanda is not allowed to borrow or invest more oversea the chances for IWCity taking over Bandar Malaysia has been revived.

China through China Railway has partnered IWCity for the take over of this GLITTERING GEM of the NEW SILK ROUTE.

NEXT ON THE AGENDA FOR CHINA IS THE DOMINATION OF WORLD CAR MARKET - SPEARHEADED BY GEELY

THAT IS THE REASON WHY AFTER BANDAR MALAYSIA - ATTENTION & FOCUS WILL NEXT GRAVITATE TO PROTON CITY OF TANJUNG MALIM



THESE STOCKS WHICH HAVE LANDS NEAR TG MALIM WILL THEN COME INTO PLAY



1) DRB -HICOM

2) MAJU PERAK

3) TALAMT

4) MERGE

5) L&G





Regards

Calvin

Singapore



http://klse.i3investor.com/blogs/www.eaglevisioninvest.com/128122.jsp