The first international merger and acquisition case carried out by this company in that year was called "snake swallowing elephant" in the industry - the global enterprise research team composed of the First Finance and Economic Research Institute, Qin Shuo's circle of friends and the Lingjiao Business Academy entered the leading market parts industry in this period. Similar to the state-owned Weichai Group, Joyson Electronics has achieved the strategic goals of globalization and transformation and upgrading through many international mergers and acquisitions related to its main business, and has become an important supplier to the auto parts market.
To extend the time period, when we put the two companies of Joyson Electronics and Germany Prey in a historical perspective to observe, at different points in time, their position will change dramatically - "the enterprise world is also vicissitudes."
Ningbo Joyson Electronics was founded in 2004, and German Precip Electronics was founded in 1919; one was a once unknown name, one was a century-old factory with good technology and brand; they were originally partnerships, but after experiencing the global financial crisis in 2008, Germany Prey was finally acquired by the newly established Joyson Electronics.
With this acquisition, Preh Electronics has survived the "crisis of old age"; and the new Joyson has also gained the technical strength to overtake in the international market, and gained the international experience of successful mergers and acquisitions, and has since entered the fast lane of global development.
"Globalization is one of the paths chosen in the development of Joyson Electronics." Liu Yuan, executive vice president of Joyson Electronics, said.
Let's take a look at the early Joyson Electronics. At the beginning of its establishment, its business was mainly to produce some auto parts that did not have high technical content. However, unlike other domestic parts manufacturers, Joyson does its own design and makes some small assemblies with functions. Later, Joyson Electronics quickly established the development concept of synchronous design and development with automobile manufacturing OEMs, and its customers were mostly overseas automobile manufacturers.
In 2006, Joyson began to supply Volkswagen, GM, Ford and other manufacturers, and achieved sales revenue of 20 million yuan that year. In 2008, it was successfully promoted to Volkswagen A-level supplier and became a global supplier of GM. In 2009, Joyson acquired the Sino-German joint venture Shanghai Huade Plastic Products Co., Ltd., further completed the expansion and integration of the auto parts product line, and became one of the leading enterprises in the domestic auto parts industry.
Joyson Electronics' global headquarters in Ningbo (the company has a layout in 30 countries around the world, with a total of more than 40,000 employees, ningbo only more than 1,700 people)
However, during this period, the core technology of China's auto parts industry was still lacking, and similar companies continued to emerge. In Jiangsu and Zhejiang alone, there were one or two thousand related enterprises in the same period, and the competition within the shallow technology industry was fierce.
Joyson Electronics is trying to seek a breakthrough path: how to get out of the environment of the domestic industry's big price war and find another way to enter the global high-end auto parts field?
The company has the inherent motivation to grow upwards, and at the same time, coupled with opportunities, Joyson Electronics was able to successfully acquire Preh in Germany in 2011.
First, the "chemical reaction" behind Joyson's acquisition of Prey
Preel electronics in Bad Neustadt, Germany, was founded in 1919 as a radio and electronic component. Later, it gradually grew into an automotive central control platform manufacturer with a number of independent technology patents and a stable customer base, and is an automotive electronics manufacturer with international influence.
In 2008, due to the impact of the global financial crisis, Preh Electronics was in trouble. At the same time, the fund that bought Preh Electronics is about to expire and wants to get out of hand as soon as possible. In the end, Puri Electronics came to the point of listing for sale.
Wang Jianfeng, the founder of Joyson Electronics, once visited The highly intelligent production workshop of Puri in his work and learned that although the company encountered a crisis, the technology was not backward. If it can be acquired, it will bring revolutionary changes to Joyson Electronics. But at that time, the annual revenue of Joyson Electronics was much lower than that of Preel Electronics; at the same time, if it participated in this merger, Joyson would also face other more powerful competitors in the industry.
However, due to the value of Preel Electronics and its own business in line with the development trend of the auto parts industry at home and abroad, Joyson Electronics was finally fully prepared to participate in this competition.
In April 2011, Joyson Electronics gave almost everything to acquire Preel Electronics, a German electronics with an annual revenue of 360 million euros. This was the largest international acquisition of automotive electronics by a Chinese company at that time, and was called "snake swallowing elephant" in the industry.
Li Junyu, chief financial officer of Joyson Electronics, said: "We gave up the high-return real estate industry that year, took some of the gains we got from it, and all the belongings we got in the past five or six years in auto parts to buy Prey, in fact, the pressure was also very high." ”
However, the operation of "one loss and one gain" was later proved to be correct in practice. The customers, technology and other resources brought by German Preh to Joyson have helped Joyson transform into a leading enterprise in high-end automotive electronic components.
In the past ten years, Joyson Electronics' annual operating income has increased from 2 billion yuan to 50 billion yuan. Even in the face of the impact of the epidemic and industrial changes since 2020, there are still 59.6 billion yuan of new orders in 2020; and the subsidiary Preh has not only tripled the number of employees, but also quadrupled its annual operating income, from 360 million euros in the year of completion of mergers and acquisitions to 1.5 billion euros, and successfully ranked among the top 100 global auto parts companies.
In the view of Joyson Electronics, this merger and acquisition is not a simple one-plus-one combination, but benefits from the "chemical reaction" that occurs between the two companies.
Second, the "catalyst" of chemical reactions
How exactly did the "chemical reaction" between Joyson Electronics and Preh Electronics occur? In this survey, we heard Joyson Electronics' own statement.
1. Strategic integration
The strategy of the enterprise determines the direction of the enterprise, especially for the enterprise after the merger and acquisition. Only when the strategic objectives are consistent can we form a synergy.
As early as before the merger, Joyson Electronics invited the managers of Preay Fund Company and the CEO and CFO of Prea Electronics to China to communicate with them what the purpose and original intention of the acquisition of Prea Electronics was. German companies practice a governance structure of supervisory boards, which determine the company's future path to sustainable development, rather than shareholders. Because shareholders have expectations, but shareholders' expectations need to be transmitted by professional managerSDs (managing directors) and put into practice to finally achieve.
"At that time, we invited three MDs to China, pointed to the location of the factory in Ningbo and told them that in the future, we will build a production base for Preh in China, and we hope to introduce the Chinese OEMs to Puri and become Apsy's customers." Recalling this unusual merger and acquisition case, Li Junyu is still impressed by some details.
Preh's management, having witnessed the development of China at the time and learned how Joyson would help them establish customer relationships and production sites in China, returned to Germany with doubt.
Half a year later, the management of Puri Electronics came to China again and saw the new factory rising from the ground, and the above-ground construction had been completed in only half a year. They believe in the sincerity of the Chinese government department and Joyson Electronics. After many and full discussions on the future development strategy of Puri in China, Puri finally decided to cooperate with Joyson. Throughout the preliminary investigation to the final decision, Joyson and Puri jointly discussed the problems in the process of international governance and respected each other's differences.
The integration of business strategy is reflected in the integration of the advantages and strategic links of the two enterprises to improve the overall profitability and core competitiveness of the enterprise.
At the beginning of the acquisition, Wang Jianfeng, chairman of Joyson Electronics, once said, "We learned and appreciated Puri through a joint venture, which is a company with first-class expertise, and finally decided to acquire a majority stake in it." Since Joyson and Preh are rooted in different market regions, the ideal complementarity can be achieved. We will provide cost-effective automotive cockpit control systems to our common customers around the world. Since then, both parties have kept their promises, and after the completion of the merger, Preh, with the support of Joyson, has established subsidiaries in China and increased capital in many places around the world to enhance order acquisition capabilities and capacity conversion capabilities, and its performance has always maintained double-digit growth. At the same time, Puri is also looking for suitable opportunities to expand and expand the scale effect. In addition to its core businesses such as automotive cockpit control systems and automotive human-machine interfaces, Puri is also investing in growth markets such as new energy vehicles. In 2017, the new R&D center of Puri was officially put into use, focusing on the field of intelligent driving and new energy vehicle technology, and the driving force of industrial R&D and production innovation was once again enhanced, providing strong technical support for the rapid growth of Puri's revenue.
After ten years of rapid development, Today's Preh is a global top 100 supplier of auto parts with core competitiveness, with a globally recognized team of high innovation ability, with factories in China, Germany, Portugal, Romania, Poland, Sweden, the United States, and Mexico, forming a strong product matrix, especially new energy vehicle battery management, on-board chargers and 800V technology, etc., which has become an accelerator for the development of Puri.
2. Integration of organization and system
Different cultural backgrounds and management concepts have allowed Joyson and Puri to spend a lot of time understanding and integrating with each other. The integration of organization and system is to form a unified and orderly organizational structure and management system after mergers and acquisitions, so as to achieve the stable operation and development of enterprises. However, in cross-border mergers and acquisitions, the organization and system of enterprises in various countries and regions are quite different, and how to better integrate tests the wisdom of acquirers.
Joyson adopts the policy of allowing Preh to manage itself to the greatest extent, follows the local management, and only manages the internal control system and financial control, which not only meets the requirements of local laws and regulations, but also meets the requirements of the governance of Chinese listed companies for risk control management, and strengthens the management of the headquarters to the branches in this way. The specific operation is mainly divided into two aspects:
On the one hand, there is budget management and delegation of authority. Joyson subdivides the annual budget into head budgets, which include controlling all total headcounts to sell fixed production. Under normal circumstances, the car forecast data given by the relevant departments of Joyson Electronics is very accurate and can better predict the output of automobiles in the next three years. Each business unit will determine its own personnel, operation, fixed asset investment and capital arrangements based on the sales status of the automobile OEM. In the case of the budget management system as a guide, the financial department will hand over the authorization documents to the company's management, and then in the process of managing the company, constantly check whether they have violated their own authorization documents in the management process, whether they have violated the budget, whether they have violated local laws and regulations, and then continuously monitor the whole process. Finally, different authorizations are given according to the different sizes, scales and business development of each business unit.
On the other hand, it is discussed at the quarterly board of directors and the board of supervisors to discuss some large strategic developments, such as customer product strategy and some large capital expenditures, important personnel arrangements and other important decisions that determine the relatively core key of the entire company. Each month, based on the communication at various business levels of the business unit, the finance department observes how the strategies are ultimately affected in the implementation process, what kind of deviations are caused, and how effective management can take action to improve this deviation.
Lee Has been a supervisor at Puri and has a deep understanding of the difference between Joyson and Puri's management philosophy. She said that in the first three years of the merger, Joyson has been observing how Puri manages globally. She found that Preh's German management team was rigorous and good at planning, and would do a very detailed and full consideration before the meeting, and set the agenda for the next year's meeting when the previous year was held. Before holding a specific meeting, the materials involved in the meeting should be sent to all supervisors and read in advance. A topic could not be proposed on an ad hoc basis, but should be fully discussed in the established topic, and the meeting was a decision-making process.
At one point, Mr. Lee said, regulators issued a temporary document requiring that the work must be done in a very short period of time. The German management team said why not inform a month in advance? In the process of running into many things, German employees gradually understood some of the management requirements of the Chinese side, and the Chinese management team also understood the working habits of Germans.
In the past ten years since the merger and acquisition, in order to achieve the integration of Eastern and Western cultures and management concepts, Joyson Electronics has gradually realized the complementary strengths and harmonious integration of the two sides through a series of internal system construction.
3. Integration of human resources
The strategy of the enterprise is driven by talents, the development of the enterprise is led by talents, and the human resources policy directly affects the stable development of the enterprise. After the merger, Joyson integrated human resources by retaining the original management team, establishing an employer brand globally, cultivating independently, and cooperating with external intellectual institutions to screen top management candidates globally.
Liu Yuan, executive vice president of Joyson Electronics and chairman and CEO of KWANSA, said that in the process of corporate mergers and acquisitions, in addition to factors such as technology and market, there is also an important factor is talent. Joyson acquired Preh, and at the beginning, the original management team was able to continue to maintain the market and even develop the market; updating technology also required a stable management team. "So I felt that I had bought the right team at that time, and this team could take Prey to a certain height, and the role of Joyson at that time was more of a strategic and tactical level to give the company very big guidance."
Joyson Electronics Global Hr resources director He Yi's views on global enterprise talent are:
First, we must have a global mindset. There are two levels here, one is the mode of thinking, which is a soft ability, such as reading the news or watching something, some people will immediately think of Ningbo, or think of other provinces and cities, but some people can immediately think of what impact this thing has on the United States, what impact it has on Europe. This is global thinking.
The second is to master the universal language of globalization, which refers to the way of expression, not just a foreign language. For example, when communicating with american colleagues, we like to use the term "dedication". If this word is translated into English, foreigners actually don't understand it very well. In addition, they may also disagree with dedication. In fact, there is a word in English, dedication, and if you speak in this international language, you can win the recognition of the other party, and the distance between the two sides will be shortened.
In addition, He Yi said that in the process of attracting talents, enterprises should pay attention to building the brand image of employers, integrating and disseminating employer brands and value propositions, and letting employees feel the value proposition of employers with a series of experience activities.
In the more than a decade of rapid development of Joyson Electronics, the entire company team has continued to grow, in addition to the senior management found through external intellectual institutions, Joyson has also cultivated leaders in different fields that adapt to the development of globalization, and the new German CEO Charlie Cai is one of them. As a member of the management of Puri, Cai Zhengxin has been involved in this successful Sino-German merger from the beginning. In the ten years of working in Germany, he has grown from being considered a "capital supervisor" by local employees in Preh to letting German employees take off their colored glasses step by step to today's global CEO. His deep cultivation and growth in Puri is also an important driving force for the integration of Puri and JONSA.
4. Cultural integration
In cross-border M&A, due to differences in business scale, region and other aspects, the cultural differences between two companies are usually very large. Business ideas, price concepts, work attitudes, management methods, etc. can lead to strong cultural conflicts at all levels.
Li Junyu said: "The inevitable cultural conflict is still relatively fierce. ”
In the process of dealing with local management and grassroots employees in Germany for a long time, Li Junyu found that Germans are more concerned about personal ideas and identity, as well as the balance between personal life and work. In the process of integrating the two corporate cultures, respect for culture is very important for Preh.
"We need to be patient to understand what the other person thinks and why? What was the basis for his consideration in doing this? After full communication and a basic consensus on what to do in the future, everyone can decide and start to do it. The locals would not accept the mandatory practice of having to do things my way of thinking, which was impossible for the Germans. ”
"In addition, Germans have rules to follow in their work. Respecting their legal system, it is better for us to work with them in a local way. ”
Regular reports on the long-term strategic planning of the Chinese management to dispel the doubts of the acquired enterprises; through the shareholders' meeting and various exchange meetings, to eliminate the relevant doubts of both sides; the establishment of overseas regular training and incentive mechanisms... In the past ten years, in order to narrow the differences in culture and management concepts between the East and the West, Joyson has spent a lot of effort, and the Sino-German collaborative work method formed in the run-in has maximized the expected effect of mergers and acquisitions.
Third, open the road to globalization through mergers and acquisitions
Joyson's acquisition of Preh has brought Joyson the expansion of its international vision and practical operation experience.
"If you don't exercise, if you don't see it yourself, if you don't take care of it yourself, you will never learn to be international." Conflicts in this process, etc., are actually learning processes. Liu Yuan said.
Since 2011, Joyson Electronics has acquired automotive electronics company PREH in Germany, KSS in the United States, a global supplier of automotive safety systems, TS in Germany in the field of intelligent vehicles, and Takata Assets. Through the upgrading of innovative products and many international mergers and acquisitions, the company has achieved the strategic goal of globalization and transformation and upgrading, and has become a top supplier of auto parts, dedicated to the research and development and manufacturing of intelligent cockpits, intelligent driving, new energy vehicle electronics and automotive safety systems.
Joyson Electronics Smart Cockpit Domain Controller Production Line
Thanks to a number of mergers and acquisitions since 2011, the asset scale and revenue scale of Joyson Electronics have climbed rapidly in less than 10 years: the total assets at the end of 2012 were 5.167 billion yuan, and by the end of 2019, the total assets increased by about 10 times to 56.925 billion yuan; the total revenue in 2010 was 1.125 billion yuan, and the total revenue reached 61.699 billion yuan in 2019, an increase of nearly 54 times in less than 10 years.
M&A is a high-risk and high-yield business practice. Although mergers and acquisitions help enterprises to achieve strategic adjustment of production structure, promote asset flows, expand production scale, improve production technology level, promote cultural integration and management upgrades, etc., however, the success rate of mergers and acquisitions has not been high, because many enterprises have ignored the management integration in mergers and acquisitions, which eventually led to the "parting of the way" between the two enterprises. Looking at the successful cases of mergers and acquisitions at home and abroad, the management integration after mergers and acquisitions is the key to determining the success of corporate mergers and acquisitions.
Fourth, the development of the late stage of globalization
After the active merger and acquisition integration, Joyson Electronics began to harvest a series of benefits brought by overseas mergers and acquisitions, such as synergy effects, financial benefits, industrial upgrading, etc. While globalization is gradually unfolding, the development of Joyson Electronics is also facing new challenges.
1. The impact of the epidemic on global enterprises
Affected by the new crown epidemic, the global automotive industry chain has been greatly challenged in the past two years, and the global light vehicle production in 2020 alone fell by about 16.24% year-on-year, and the decline in foreign markets was more obvious.
Joyson electronic products are mainly sold abroad. Affected by the epidemic, Joyson's overseas factories have reduced their revenue due to the government's forced shutdown. In 2020, foreign regions achieved revenue of 36.076 billion yuan, down 24.54% year-on-year; domestic revenue was 10.977 billion yuan, down 17.23% year-on-year.
In terms of product production and sales, in 2020, the production and sales of Joyson Electronics' main products have mostly declined, the production volume of automotive safety systems has decreased by 21.77% year-on-year, and the sales volume has decreased by 22.29% year-on-year; the production volume of automotive electronic systems has decreased by 1.27% year-on-year, and the sales volume has decreased by 2.62% year-on-year; the production volume of functional parts and assemblies has decreased by 3.61% year-on-year, and the sales volume has decreased by 7.39% year-on-year; the production volume of intelligent vehicle connection systems has increased by 1.37% year-on-year, and the sales volume has increased by 0.57% year-on-year.
The epidemic has had a more far-reaching impact on the industrial chain. In the process of deepening the globalization process, the supply chain is relatively long, and under the impact of the epidemic, the response speed of the entire chain is slower than that of a single region and a single factory, which makes the impact of the epidemic more obvious.
2. Technological innovation provides a basis for the development of enterprises
Mergers and acquisitions have allowed Joyson not only to cross the threshold of technological upgrading, but also to leapfrog a long period of technology accumulation and stride into the core position of the global automotive supply chain.
"Behind the win-win situation of '1+1>2', it is inseparable from persistent innovation." Lee Said. Over the years, Joyson Electronics' R&D investment has remained at about 6% of total revenue. Even in 2020, its R&D investment will still exceed 3.2 billion yuan, with an investment ratio of 6.7%. At present, Joyson Electronics has major R&D centers in Asia, Europe and the Americas, with about 5,300 engineering and R&D personnel and more than 5,000 patents worldwide.
Over the past decade, Joyson Electronics has accelerated its digital transformation, continuously strengthened the construction of benchmark digital factories, and promoted them globally to improve production efficiency through the digital reengineering of production processes. Joyson Electronics has cooperated with Microsoft to carry out digital transformation on a global scale to realize the interconnection of global data, and form resource sharing and network collaboration in R&D, manufacturing, production, testing, logistics and control.
In recent years, Joyson Electronics has set up the Joyson Intelligent Automotive Technology Research Institute and the Joyson New Energy Research Institute to continue to promote innovative research and development in the fields of intelligent cockpit, intelligent driving and new energy electronic control, carry out a new round of key technology attacks, and promote the high-quality development of key areas of automotive digitalization.
In the face of the wave of intelligent electrification of the automotive industry, the technological innovation of Joyson Electronics provides R&D strength and production capacity support for further sustainable development and in-depth globalization.
Overseas mergers and acquisitions have enabled Joyson Electronics to grow rapidly in the auto parts industry, forming the effect of "borrowing power". But the industry and beyond have also been paying attention to Watson, a global company that has made a name for itself in mergers and acquisitions – whether the foreign companies that have bought it can bring stable and long-term benefits to Joyson in the future, and time may give answers at different stages.
Text | Yu Ship He Xiao
Edit | Yu Ming Ma Shaozhi
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