Text: Zheng Driving @ Tan Qing said AI editor-in-chief
Recently, Geely's acquisition of Meizu has made new progress. Geely's Star Era intends to acquire a 79.09% stake in Meizu, thereby obtaining an independent control of Meizu.
In the eyes of many people, for Geely, this acquisition is likely to be a clever hand that can be attacked and defended.
If meizu mobile phones are bundled with Geely cars in the future, Geely will have an additional entrance device for car-machine interaction, after all, increasingly intelligent cars will also join the ecology of the Internet of Everything. And even if mobile phones continue to maintain sluggish sales, Geely can at least use Meizu's experience in mobile phone systems to solve its own car lag problem.
In fact, a history of the development of Geely Group, half of the history of capital mergers and acquisitions.
Geely has acquired many overseas brands such as Volvo, Proton, Lotus, Andy Flying Cars. Nowadays, in terms of intelligence, The Flyme For Car with the assistance of Meizu can also make Geely's car and machine system take off smoothly. Coupled with the previous layout of the satellite Internet, Geely has already set its sights on the sea of stars.
Taking advantage of this opportunity, we may wish to take stock of some of Geely's important mergers and acquisitions and investment events in recent years to get a glimpse of where Geely's capital operation will lead Geely's development.
The path dependency of "buying, buying, buying"
Geely has always been familiar with the way capital operates. From becoming the largest shareholder of British car manufacturer Manganese Copper in 2006 to acquiring Australian transmission manufacturer DSI in 2009, Li Shufu has been looking for suitable opportunities around the world to pocket engines, transmissions and other technologies.
Among them, in 2010, Geely acquired the luxury brand Volvo for $1.8 billion, which is considered by many to be a rare snake swallowing elephant transaction, and under the close cooperation with Volvo, Geely hatched the Lynk & Co brand and together created the vast SEA architecture.
In the transformation of new energy, Geely has continued its consistent style of making up for shortcomings through investment. In addition to the acquisition of Meizu, Geely has already had some layouts for the upstream of the new energy industry. For example, in 2019, Geely Automobile invested in new energy materials developer Corun, and in January this year, Geely Group invested in power battery developer Fu Neng Technology.
In terms of automotive semiconductors, Geely invested in Navigation Chip and Product Manufacturer BGI Beidou in October 2020, Landline, a domestic automotive chip manufacturer, in February 2021, and Yuanzhuo Optoelectronics Technology in the field of lithography.
Of course, we can't deny that in the era of fuel vehicles, such a way is actually a shortcut to rapid growth for domestic independent car companies with backward "old three electric" technology.
In fact, even in the global world, due to the high complexity of the automobile manufacturing industry, no car company can master all the technologies alone, and from the rise of German and Japanese car companies, it can be found that this is actually a proven and feasible development path.
However, if such a strategy continues to be used in the new energy era, will it continue to work?
Along with the new energy era, there is also the trend of intelligent automobiles. Judging from the current high market value of new forces such as Tesla and Wei Xiaoli, automobile intelligence is a comprehensive impact on the moat of traditional car companies.
Under the trend of intelligence, data and algorithms have become the strategic commanding heights, and in terms of self-research capabilities, traditional car companies are generally weaker than the new forces with Internet genes.
On June 6, Meizu Technology released a Weibo post that it has indicated that it will cooperate with Geely's Lynk & Co to create a new in-vehicle system Flyme on Car.
Thinking that Geely's Yijiatong has developed a Galaxy OS with a rather lame experience, we may understand that in terms of filling the intelligent shortcomings, Geely has actually tried to develop itself, but basically it can be said that it failed, considering the urgency of time, we have to continue to copy the operation and continue the "buy, buy, buy" model.
Therefore, in the stage of intelligent transformation, some homework Geely is difficult to get credits smoothly by relying on "self-study", and it is difficult to pass the customs through purchase. In the long run, we must also rely more on suppliers in terms of intelligence.
Gui Shengyue, CEO of Geely Automobile Holdings Co., Ltd., once said: "Technology output has become an important and sustainable new direction for Geely, from product output to technology output, which is also a huge performance of Geely's scientific and technological capabilities. ”
However, if you give up your efforts after experiencing a shallow taste of self-research, you will not be able to talk about the output ability of technology. Then, the goal of "transforming to an innovative technology enterprise" mentioned by Li Shufu at the group meeting at the beginning of the year is probably far away.
Therefore, despite the desire for technology output, due to its inability to catch it, Geely has opened up key card points on the road to growth by acquiring other companies, and in fact has formed a path dependence.
The strategic ambiguity caused by "buying, buying, buying" is triggered
The continuous extension of Geely's investment territory seems to be a high-flying atmosphere, but in fact, it has also caused some problems.
First of all, under the multi-brand strategy, the contradiction between the brand power continuation of the old brand and the limited resources of the group has become more and more prominent.
In the field of electric vehicles, Geely's brands have been dazzling. The five best-selling new energy and electrified models listed in its financial report last year are icon MHEV, Emgrand EV, Hoshigoe MHEV, Borui GE MHEV, and Jiaji MHEV.
It is worth noting that the pure electric brand geometry car, which has been established for more than 3 years, has not entered the list of "Geely's New Energy Best-Selling Top 5".
In the long run, although Geely has acquired brands such as Lotus and Volvo, with the advent of the new energy era, the domestic new car manufacturing forces have wave after wave, the original "Wei Xiao Li Wei which zero", and now there are millet, Jidu, and self-traveling.
In the competition of the stock market, is the new energy version derived from the old brand model carried out to the end? Or focus resources, manpower and time on "native" electric brands such as geometry and krypton? Ji Li was afraid to make a trade-off.
In fact, although there are many new energy brands incubated by Geely, they rely more on channel convenience. And its sales volume through the "old with the new" approach has shown weakness in the sales data in recent months. Whether the strategy of transforming new energy by so many brands together is worth adhering to, perhaps some enlightenment can be drawn from the sales comparison of independent car companies.
According to the sales statistics of the Association, from January to May 2022, geely automobile's cumulative retail sales were 422471 units, ranking third in the retail sales of independent car companies in the same period.
And bydir, which has been ridiculed for being too low brand, but took the lead in "cutting off oil", has achieved a counterattack in terms of sales, and its cumulative retail sales from January to May are 505901 units, ranking first in the retail sales of independent car companies in the same period.
On the other hand, although the Blue Geely Action Plan released by Geely Automobile Company on November 18, 2015 was not completed as scheduled, Li Shufu blamed the reason on "the historical timing is not ripe, and the external strategic conditions have not been formed", but for such a major change in the transformation of new energy, the dispersion of the group's resources due to excessive layout may not be ignored.
Second, the changes in the automotive industry's foreign investment policy have made Geely's control over some of its brands and equity gains more uncertain.
In 2018, the National Development and Reform Commission has made it clear that the automotive industry will implement a transition period of opening up by type. In 2018, the restriction on foreign ownership of special vehicles and new energy vehicles was abolished; In 2020, the restriction on foreign ownership of commercial vehicles will be abolished; In 2022, the restriction on foreign ownership of passenger cars will be abolished, and the restriction on no more than two joint ventures will be abolished.
For Geely's Volvo, this means a more favorable operating environment at home, and Volvo is already trying to regain control of Geely's shareholding.
Now that mainland China's restrictions on foreign ownership of passenger cars have been lifted, Volvo reached an agreement with parent company Geely Holdings in July last year to acquire a 50% stake in Geely Holdings, a Chinese joint venture between the two parties.
Volvo Car Group CEO Hanken Samuelson proudly said, "With this agreement, Volvo Cars will be the first global automaker to fully integrate its Business in China." ”
As a result, volvo will gain a larger share of net income and assets after achieving wholly-owned ownership, and the income attributable to parent company Geely Holdings will be reduced accordingly.
Third, Geely continues to expand its investment territory, resulting in insufficient funds to invest in research and development, which also affects the process of subsidiary listing and financing.
In June 2021, after a year of preparation, Geely Automobile announced that it voluntarily withdrew its application for an IPO on the Science and Technology Innovation Board of the Shanghai Stock Exchange.
The reason for being "persuaded to return" is very simple, Geely's prospectus shows that in the first half of 2020, the proportion of research and development expenses to revenue was 4.64%, compared with the 5% required by the "Guidelines for the Evaluation of Science and Technology Attributes", Geely's "science and technology attributes" are not strong enough.
Compared with the high research and development costs of many new car companies, Geely's strategy is vague due to "buying, buying and buying", and it is also dragging the hind legs of Geely Automobile's IPO.
The combination of production and finance is a double-edged sword
Generally speaking, investment in the upstream industrial chain is the duty of car companies, and investment in many overseas auto manufacturers hides Geely's long skills and ambitions to go overseas. However, in recent years, Geely Holdings has gone further and further on the road of financial investment.
On December 1, 2020, Li Shufu made a significant management adjustment – the position of former Group Executive Vice President and Chief Financial Officer (CFO) Li Donghui has been changed to Chief Executive Officer (CEO).
Previously, the POSITION OF CEO has been concurrently held by Li Shufu, who has many years of experience in the automotive business, and Li Donghui, who previously served as the CFO of the group, is considered to be an important trader of Geely's overseas investment and mergers and acquisitions in recent years. Li Donghui, who is good at financial investment, is expected to build financial investment into another core business segment of Geely Holdings after obtaining more authority.
Sure enough, in the past year or so, within the Geely Holding Group, the financial investment business has been upgraded to a higher level. According to Tianyan, in the years after 2017, the operating income of Jizhi Auto Finance has grown rapidly. Through this subsidiary of the financial sector, Geely Group is cooperating frequently with banking, insurance and financial technology to accelerate the layout of its financial ecosystem.
In the financial report performance announced by Geely Group in recent years, the revenue of the financial sector has become another profit growth point in the company's business, especially Jizhi Auto Finance Co., Ltd., a subsidiary of Geely Group, which is frequently mentioned as the highlight of the financial sector.
According to geely holding group in 2018-2020 financial report, the net profit of Jizhi Auto Finance was 217 million yuan, 509 million yuan and 580 million yuan respectively, and the investment profit and loss of Jizhi Auto Finance reached 848 million yuan in 2021.
That is to say, Geely has tasted some sweetness by laying out its own financial territory.
For car companies, different revenue structures naturally represent different strategic directions and business logic. For the expansion of the layout of Geely's financial sector, An Conghui, president of Geely Holding Group, explained in an interview with the media, "After the future is in line with international standards, according to the laws of European and American development, many times in the automobile value chain, selling cars does not make money, but relies on service, finance, and insurance to achieve profits." ”
However, after all, the transformation of new energy is a protracted hard battle, and at present, Geely's new energy brands such as Geometry and Extreme Krypton are not very strong, and it is urgent to pour more group resources.
In fact, Geely's development to today's scale has entered the stage of combining industry and finance, which is also a path that many large enterprise groups with international competitiveness will go. However, whether to use finance as a starting point to guide the course of the entire group, or the operation of financial capital only serves as a tool to assist the car-making business, the priority level of the two may allow investors to have a clear judgment.
In the vigorous development history of General Electric (GE), Jack Welch, as a professional manager, has created a miracle of performance growth.
Similar to Geely, jack led GE from a manufacturing giant to a service-oriented and e-commerce-oriented corporate giant, a large part of the growth was also obtained through mergers and acquisitions, and ges with a century-old history is also one of the companies with the highest success rate of mergers and acquisitions.
But later successors found that financial services, while easier to make money than manufacturing, left a "mess" that was difficult to manage for the successors of the enterprise. In the financial crisis of 2008, on the one hand, GE's main business was not in a good situation, and on the other hand, a number of strategies and mergers and acquisitions failed one after another, resulting in GE embarking on a downward slope.
Because GE's architecture was decentralized, Francari, a former chairman, recalled, "Even though I've been with GE for 30 years, I need time to dig deeper into the different business units. ”
In fact, in Volvo's China business, geely and Volvo's shareholding relationship is more complicated, so that Volvo's pre-listing financing has encountered some twists and turns, compared with BMW, Mercedes-Benz and other car companies with clear equity relations, investors can not understand Volvo's equity relationship, so that they can not figure out what they are investing in.
Looking back at the twists and turns before Volvo's listing in Sweden, it can be found that for Geely, in order to make Volvo IPO, Geely Holdings had to reach an agreement with Volvo and give up its shareholding.
In the business machine of Geely Holding Group, Li Shufu may need to constantly toss and turn at the level of capital operation in the future, while at the same time, the promotion of a series of grand strategies related to new energy and intelligence is also facing this greater challenge.