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Government: Correct strategic alliance development

Shingo From Gasgoo.com| February 14 , 2007

Guo Yan:director of "on the Research of China Automobile Industry  Strategic Alliance",  China Automotive Technology and Research Center

Joint and restructure includes strategic alliances with both mergers and acquisitions. China's automobile industry should adopt a strategic alliance patterns and enhance core competitiveness, then use the model of mergers and acquisitions to enhance international competitiveness in the auto industry.

Guo Yan firstly defines a strategic alliance: a long-term cooperation organization by two or more complementary enterprises to share resources, and risks using the equity participation or other measures.

Guo Yan, currently what affecting the development of China's automobile strategic alliance is as follows:
Firstly, China's auto enterprises are still not aware of the primary means to rapidly enlarge and strengthen themselves is the strategic alliance. So they haven't taken the initiative to learn management skills. It figured specifically: in a joint venture always, free use of Chinese technology; inappropriate choice of partners, improperly cooperation pattern, lack of cooperation and competition strategies, and risk-control measures and so on.

Secondly, the Chinese auto enterprises often from their own interests have not been together in unison against the foreign entities. When the multinational companies in China made their maximum profit, it also minimized the interests of the Chinese parties.

Thirdly, the low level of union, and less high-profit union in industry chain; The strategic alliance of China's auto enterprises always borne in the area of complete auto production and the parts manufacture with low value-added but rarely involved in the more important areas like vehicle design, engine systems development, spare parts supply, OEM and after the market.

Fourthly, in the existing strategic alliance in China's automobile industry (mainly joint ventures), because of the great difference between China and multinational auto companies in technology, brand and management capacity, so that the development of the union was controlled by foreigners. And China will fail to achieve their own objectives.
How the country should take measures to effectively promote the automobile industry reorganization at this stage, Guo Yan believe that, the government departments should issue and implement relevant policies.

Firstly, we should emphasize particularly on domestic and international coalition, carry out mergers and acquisitions of domestic enterprises, and focus on strategic alliance with multinational automobile companies.

Secondly, we should focus on building up a partnership or the supply chain between different enterprises which based on the complementary demand, information-sharing, and aim at win-win.

Finally, the strategic alliance is a nature coming of competition in market, so the government should avoid to be a matchmaker, but make it a criterion that the enterprise aim to develop its innovation capacity and become independent quickly.(To be continued)



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