After a delay of 10 years, Dongfeng Renault will eventually achieve positive results. Our reporter was informed exclusively that the foundation and signing ceremony for the Dongfeng Renault joint venture passenger car project will be held in Wuhan in July, and the total investment of the project has been expanded from the 7.21 billion yuan to the 11 billion yuan. A person close to Sanjiang Renault’s senior management revealed that the SASAC had approved the request for transfer through Dongfeng Motor’s and Sanjiang Renault’s equity agreements at the end of May, thus clearing the final obstacles to the Dongfeng Renault joint venture project.
Dongfeng and Renault’s joint venture negotiations can be described as “marathonsâ€. After being started in 2003, it has undergone several suspensions and restarts. The dust has finally settled to a date of 10 years. However, since 2011, China’s auto market has entered a stage of slight growth and missed the “Golden Decade†high-growth bonus. How many opportunities for the Chinese automobile market will be left to Renault?
Or put into Hong Kong listed platform
Starting from Dongfeng Motor’s Wuhan headquarters and driving on the Third Ring Road, it took more than 10 minutes to drive, and an open space with about 2,200 acres of weeds and mottled spots appeared on the west side of the road. “The future production base of Dongfeng Renault is here.†A person close to the top of the Dongfeng Motor Group told reporters in the open space.
The person told this reporter that since Dongfeng Renault was established on the basis of the restructuring of Sanjiang Renault, according to the SASAC principle of the transfer of state-owned stock rights, the key to the approval of this project is the SASAC rather than the Ministry of Industry and Development and Reform Commission. At the end of May this year, the SASAC approved China Aerospace Sanjiang Group to transfer its 55% stake in Sanjiang Renault to Dongfeng Motor Corporation's Dongfeng Motor Group Co., Ltd. (00489.HK). In June, Sanjiang Renault has completed many changes such as company name, legal person, and registered capital. Signing ceremony and foundation laying ceremony will be held in Wuhan this month.
According to the SASAC approval, Dongfeng Motor Group Co., Ltd. is the holder of 55% equity of Sanjiang Renault, which may mean that Dongfeng Renault will inject into Dongfeng Motor Hong Kong listed company platform. An auto industry analyst, who did not want to be named, believes that Dongfeng Renault will inject into Hong Kong listed companies from its inception.
According to the project publicity announced by the Hubei Provincial Environmental Protection Bureau and the State Environmental Protection Administration, the Dongfeng Renault project has a total investment of 7.21 billion yuan. However, in May this year, Wuhan Mayor Tang Liangzhi and Renault Automobile Executive Vice President Nakamura Kajiu and senior Dongfeng Motors held talks and determined that the total investment of the project will be expanded to 11 billion yuan in two phases. The first phase of investment is 7.2 billion yuan, and the annual production capacity is 150,000. It mainly produces SUVs and MPV models. It plans to start production in 2014; after the profits are realized, the second phase will expand the sedan models.
Dongfeng Renault's preparatory group office is located in the comprehensive center of Dongfeng Automotive Wuhan headquarters, and currently has about 100 people. Sources claimed that Dongfeng Renault’s organizational structure will follow Dongfeng Nissan Passenger Vehicle Company. Hu Xindong, Minister of Dongfeng Motor’s Legal and Securities Affairs Department and Head of Capital Operation Department will serve as the general manager of the Chinese side. Chen Yu, former deputy head of Dongfeng’s Nissan Market Sales Headquarters, will take over as the manager. Sales, channel executives.
Hu Xindong is 47 years old. In 2005, he served as the director of the legal affairs department of Dongfeng Motor Company. After Dongfeng Motor Group Co., Ltd. listed in Hong Kong, Hu Xindong served as director of the listed company's directorate secretary and investor relations department. Mr. Chen once worked as head of the horizontal business department and deputy head of the marketing headquarters of Dongfeng Nissan. In 2010, he moved to Dalian Zhongsheng, the car dealership group, as the COO. At the beginning of 2013, Chen Hao reappeared in public view. At this time, he worked as the head of investment for the Dongfeng Renault Preparatory Group, and started to look for dealers for Dongfeng Renault.
Marathon negotiations
The Dongfeng Renault Joint Venture Negotiations started as early as 2003 and has been delayed for various reasons. Prior to this, Renault Motors already had a joint venture company in China. However, due to poor operation and long-term discontinued production, this has also become a difficult point in the negotiations between the two sides and the approval of the relevant national ministries and commissions.
In 2003, Nissan Motor Co., Ltd. and Dongfeng Motor Co., Ltd. signed a strategic joint venture agreement to form Dongfeng Motor Co., Ltd. to introduce Nissan passenger vehicles and commercial vehicles into China. Subsequently, Renault-Nissan CEO Carlos Ghosn proposed to introduce Renault to China through cooperation with Dongfeng and negotiations between the two sides began.
In 2004, Dongfeng and Renault successively stated that the Dongfeng Renault passenger car project will be put into production in 2006. However, as a matter of fact, by the end of 2005, because the differences between the two sides could not be coordinated, the negotiations were virtually terminated and the Dongfeng Renault project preparation team was dissolved. A senior executive of Dongfeng Motor once told this reporter that the differences in the location of the project are the cause of the negotiations' stranding. Renault tended to locate its production base in Huadu, Guangzhou, adjacent to Dongfeng Nissan, while Dongfeng Motor insisted that its production base be located in its headquarters in Wuhan.
Dai Bole, who was then the president of Renault Asia Pacific, once said: “The location of the Renault project is not determined by Renault itself, but depends on Dongfeng Motor, Renault and local governments.â€
The project address is only one of the differences. According to the requirements of the National Development and Reform Commission, when foreign capital has bad assets in China that are not liquidated, it is very difficult for new projects to be approved. Sanjiang Renault has become a “stumbling block†for Dongfeng Renault. “The Sanjiang Renault project will be included in the Dongfeng-Renault cooperation system, but how to dispose Sanjiang Renault's shares and the remaining assets, the three parties have greater differences.†In 2008, a senior Dongfeng Motor said.
At the same time, with the increase in profit and sales contribution of Dongfeng Nissan, Dongfeng Honda, and other joint venture companies, Dongfeng Motor has developed into the second largest automotive group in China, and it has not been “Ngau Amon†at the beginning of 2003. In contrast, Renault’s global sales and overseas business continue to encounter difficulties, and the formation of joint venture companies to enter China is more urgent for Renault.
"Dongfeng Motor has assessed the situation, and has been continuously increasing the bargaining conditions after realizing this." People close to the top of Dongfeng Motor Group said that Dongfeng Motor has changed from a weak position to a strong one, which has also led to a lengthening of the negotiation process.
In June 2012, Dongfeng Motor and Sanjiang Group signed an agreement to acquire a 55% stake in Sanjiang Renault. Dongfeng Motor and Renault Automobile finally reached the negotiation end. However, the sacred things happened. At the end of May this year, SASAC did not approve the transfer of shares of Sanjiang Group and Dongfeng Motor. With many problems, Dongfeng Renault will set sail slowly as a latecomer.
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