In 2022, the Sino-foreign joint venture shareholding ratio policy for passenger car enterprises will be fully liberalized, and foreign car companies can break through the previous policy constraints of no more than 50% of the equity in the joint ventures established in China and strive for more than 50% of the equity share.
The relaxation of this shareholding ratio in the policy is undoubtedly a great increase in the confidence of foreign car companies in seeking greater market share and development prospects in China. A higher proportion of equity holdings naturally means a higher right to speak at the level of the company's operational decision-making, and a new round of games has also begun for the multi-share capital forces that had to be restricted in the same joint venture company because of policy reasons.
Recently, Dongfeng Yueda Kia was pushed to the forefront of public opinion due to the announcement of one of the shareholders, Yueda Investment, to abandon the capital increase. However, for Dongfeng Yueda Kia, this equity-based game has actually been put on the surface since the active withdrawal of Dongfeng Group in December last year.
After abandoning the capital increase, the share ratio of Yueda and Kia is still 50%: 50%
From 1998, When Jiangsu Yueda Group and South Korea Kia cooperated to establish Yueda Kia in a 50%:50% ratio, to the addition of Dongfeng Group in 2002, the three parties officially started a tripartite joint venture with a structure of 25% each of Dongfeng, Yueda and 50% of Kia.
As a joint venture company, Dongfeng Yueda Kia has a history of more than 20 years of joint ventures. As a car company, Dongfeng Yueda Kia also reached the peak of 650,000 units sold annually in 2016.
At present, standing at the opportunity node of the full liberalization of the stock ratio policy, it is inevitable that people will have a reverie about whether the Korean cars represented by Kia can take this opportunity to return to the mainstream automobile market with a new attitude.
After all, in this major change in the automotive industry that has not been encountered in a century, Dongfeng Yueda Kia has not maintained its advantage after experiencing the peak of sales in 2016. For many people who are optimistic about the development of Dongfeng Yueda Kia, this development direction is frustrating. In the past 2021, Dongfeng Yueda Kia's annual sales volume was 163,000 units, down three-quarters from its peak. In the first three quarters of 2021, the main business income was 9.5 billion yuan, and the net profit was -1.715 billion yuan.
However, the "Yueda Investment Abandonment capital increase incident" that pushed Yueda Kia to the cusp of the wind, from the result point of view, did not develop in the direction that some people expected - after the departure of Dongfeng Group, Kia Automobile, as a foreign investor, took a large and radical increase in holdings.
In the announcement issued by Yueda Investment on March 1, although Yueda Investment made it clear that it would give up the capital increase, it also made it clear that the part of its abandonment of the capital increase would be funded by Yueda Automobile Group, a subsidiary of Yueda Investment Holdings.
In other words, although due to various subjective and objective reasons, Yueda Investment was unable to directly invest in the part of Dongfeng Yueda Kia's proposed capital increase of US$600 million, Yueda Capital still held the existing Yueda Kia Company through the company Yueda Automobile Group, which is a subsidiary of the same actual controller.
Therefore, for Kia and Yueda, the equity relationship between the two sides has not changed substantially. Yueda Kia, which left Dongfeng Group, is still maintaining the "five-five-point" equity structure that was previously equal to each other.
Yueda Automobile Group increased its holdings
It is worth noting that although the news that "Yueda Kia gave up participating in the capital increase" seems to have invested a smoke bomb that is easy to misunderstand in the market, the strong public opinion attention has also pushed the Yueda Automobile Group, which has invested in place of Kia Investment, to the front of the stage.
According to corporate investigations and public information, Yueda Automobile Group was established in June 2021 as a second-level subsidiary under the management of Yueda Group. In the shareholding structure, 70% is held by Jiangsu Yueda Group Co., Ltd. and 30% is held by Yancheng State-owned Assets Investment Group, which means that Yueda Automobile Group has a state-owned background.
At the same time, according to the official website of Yueda Automobile Group, the company's goal is to integrate and optimize the resources of Yueda Group and Yancheng SDIC automobile industry, improve the efficiency of collaboration, form a development synergy, and strive to build the most distinctive and excellent investment platform for The automobile industry in China and help the Yancheng automobile industry accelerate development. Among its linked subsidiaries, Dongfeng Yueda Kia ranked first, in addition to Guoxin New Energy, Huaren Express and other automobile companies.
Therefore, it is not difficult to understand why the Yancheng People's Government participated when South Korea Kia Co., Ltd. and Jiangsu Yueda Group signed an expansion investment agreement on February 7.
In the signing of the cooperation agreement, the Yancheng government also actively expressed its full support for Kia to expand sales in the Chinese market and provide support for the export trade of Kia's Yancheng plant to help Kia's development in China. It can be seen that the Yancheng city government has thrown a sincere olive branch to Kia.
The "New Triangle" after the departure of the East Wind
In the equity adjustment of Dongfeng Yueda Kia, the Yancheng City Government has played an active and proactive role, but it is reasonable.
As the largest passenger car production base in Jiangsu Province and a national auto parts industry base, Yancheng's automobile industry can bring considerable tax revenue to Yancheng every year. As far as Kia is concerned, Kia's production base in Yancheng is its only production base in China. As a result, Kia has sold nearly 6 million vehicles in more than 20 years, which naturally translates into local taxes in Yancheng and effectively drives the development of the local auto parts industry in Yancheng. Therefore, Yancheng will not give up Kia easily.
In fact, since Dongfeng Group decided to withdraw, Yueda Automobile Group has spent 297 million yuan to take over 25% of the equity of Dongfeng Group and officially entered the equity structure of Yueda Kia.
Coupled with the continued increase in investment in Yueda Holdings, the equity ratio of Yueda Automobile Group has further increased from 25% to 45.8%, while Kia Co., Ltd. and Yueda Investment are 50% and 4.2% respectively.
It can be foreseen that behind the existing equity, the "new triangle" actually formed by Kia Co., Ltd., Yancheng People's Government and Jiangsu Yueda Group will replace the vacant seats after the departure of Dongfeng Group and lead the new joint venture company into a new era of joint ventures. At the same time, in the months-long equity structure adjustment experienced by Dongfeng Yueda Kia, these visible and invisible game clashes between the multiple parties of the joint venture are the transformation pains that the new joint venture company of Yueda Kia must experience after the departure of Dongfeng Group.
According to the information released by Yueda Kia, the new joint venture will release the new company name to the public in April. For Yueda Kia, this will be a new beginning of "de-Dongfeng".
Kanche said
According to the previous plans of Yueda and Kia, in the future, Kia will focus on promoting the introduction of global strategic models and new energy vehicles, and jointly improve Kia's global strategic model lineup together with existing models on sale such as Jawa and Zhipao Ace. At the same time, from next year to 2027, starting from the new pure electric vehicle EV6, Kia will launch a new electric vehicle model in the Chinese market every year, and gradually build a new EV matrix of 6 electric vehicles.
For Kia, China is an important market that it will not give up on its global strategy, and now is the key time for Kia to start a new round of all-out sprints in China. We look forward to seeing a new Yueda Kia in China, bringing users the outstanding mobility solutions described in Kia's global "2030 Strategic Plan".