China Weichai Power and the German KION Group Strategic Cooperation Signing Ceremony The purpose of M&A is industrial upgrading
For many people, Weichai is a traditional internal combustion engine company. However, after engaging in diesel engines for several decades, in 2012, it acquired the world-famous luxury yacht company Italy Ferretti. On February 26, 2018, Tan Xuguang, chairman of Shandong Heavy Industry Weichai Group, faced more than 100 suppliers from all over the world. He said: Mergers and acquisitions have stimulated the upgrading of the industrial structure, driving traditional industries to the high end, and realizing the drive from onshore power to offshore power. , investment driven to consumer-driven transformation.
In 2012, Weichai acquired the Italian Ferretti company. After several years of meticulous work, Ferretti achieved losses and entered a rapid development path. At the same time, Weichai develops high-end yacht power in a low-key manner and develops high-speed boat propulsion systems based on the acquisition of the French Boduuan company's ship propulsion technology, accelerating the development of China's technology and business in this field, and entering the high-end marine power market. .
Today's Weichai has completed the international market layout. Internationalization is not simply the expansion of corporate territory overseas. The internationalization of Weichai has always been centered on the layout of "adjusting short boards and adjusting structure." Going out through capital, technology is introduced to achieve high-quality development.
In 2012, Weichai acquired Germany's Linde Hydraulics, bringing the world's leading high-end hydraulic technology to its knees. In 2015, the joint venture plant Linde Hydraulics (China) Weifang plant was put into production. The hydraulic powertrain system built by “Weichai Engine + Linde Hydraulics†emerged and quickly entered the market of high-end agricultural machinery and engineering machinery, quietly changing the pattern of these industries.
At the same time, Weichai succeeded in building a world-leading smart logistics industry chain through the acquisition of KION of Germany and Dematic of the United States. It became the strongest new force for business growth, and once again realized the upgrading of the industrial structure.
In 2017, KION's global sales rose by 37% year-on-year; net profit increased by 73% year-on-year. Gordon Risker, chief executive officer of KION, praised the cooperation with Weichai as a successful case of Sino-German corporate cooperation.
The key to M&A is integration
There is a “law of sevens and seventies†in cross-border mergers and acquisitions, that is, 70% of mergers and acquisitions do not achieve the expected commercial value, and 70% of them fail to integrate after mergers and acquisitions. However, all overseas acquisitions by Weichai have achieved profitability and have driven the upgrading of domestic businesses.
Tan Xuguang said that mergers and acquisitions are not for income consolidation, to achieve a numerical growth, but around the adjustment of the strategic structure. M & A companies, after the delivery, is the real beginning.
For the integration of overseas companies, Weichai's experience is: strategic integration, resource sharing, and independent operations. Promoting business integration through cultural integration is an important magic weapon for Weichai's overseas mergers and acquisitions. In the cultural integration, we must first learn to respect and accommodate, and use the world's mind and structure to operate the acquisition company. Weichai's "culture of tolerance" has been played in overseas business practices. Weichai and overseas companies not only achieved the interoperability of elements such as personnel, technology, and resources, but also reached a healthy state of “software†such as management, culture, and the like, “seeking common ground while reserving differences, learning from each other, and integrating developmentâ€.
For several years of hard work, the Weichai Operating System (WOS) has been successfully introduced into merger companies such as Baudouin in France and Ferretti in Italy.
In Baudouin, France, with the support of Weichai, WOS lean production management has been fully promoted in the production system. At the same time, the introduction of the Weichai R&D system PDM has changed the situation of the past project development of Baudouin and the lack of appraisal and control. It has achieved standardized and streamlined development and greatly improved R&D efficiency.
An engine can be produced within 90 seconds of Weichai headquarters, but Ferretti yachts are handmade and have a long production cycle. In 2012, after Weichai reorganized Ferretti, it proposed to introduce Weichai's mature manufacturing concept into the yacht's production process. Less than four years, 5S and Kanban management, modular manufacturing, IT manufacturing management systems, etc., fell on the ground in Faraday, resulting in a significant increase in production efficiency and a significant reduction in manufacturing costs.
In the international operation, Weichai insisted on the "product + capital" two-wheel drive strategy and gradually formed an overseas expansion strategy of "trade exports + localized production + technology output + mergers and acquisitions" from South Asia, the CIS to Europe, North America China, Southeast Asia, the Middle East, and North Africa have built a global market and become the forerunner of the national “One Belt and One Road†initiative.
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