When it comes to Joyson, its many large-scale mergers and acquisitions in the history of overseas mergers and acquisitions of Chinese companies are always impressive. But if it is still simply defined as the "king of mergers and acquisitions" in 2024, it is obviously biased.
Looking back at the development of Joyson in the past 20 years, the strategy of "manufacturing as the mainstay, supplemented by capital operation, and the two-wheel drive to promote the development of manufacturing industry with capital operation" has been consistent. The benign interaction between the industry and the capital market makes it possible for Joyson to implement strategic advance predictions. Through connotative development and extended mergers and acquisitions, Joyson has broken the development ceiling again and again, and finally completed the dual goals of industrial upgrading and globalization, becoming a world-class auto parts giant.
Jump from the bottom and get out of the integration dilemma
In recent years, the global integration of the automotive safety business has made Joyson's management very troubled, and even entered the most difficult moment since its establishment. Previously, in just three or four years, through two major acquisitions, Joyson directly jumped from a new player in automotive safety to the world's second largest automotive safety manufacturer.
Originally, a large number of high-quality automotive electronic assets were pocketed by Joyson, and how to make them a whole and produce coordination efficiency was controversial in the market. After the acquisition of Takata assets, especially due to the epidemic, global supply chain and other issues, Joyson Electronics' automotive safety business made a large goodwill impairment in 2021, and the doubts reached its peak. Whether it can get out of the integration dilemma, the market is extremely concerned.
Joyson's entry into the automotive safety industry was not immediate.
As early as 2013, seeing the trend of intelligent and electrified vehicles, Wang Jianfeng, the founder of Joyson, put forward the company's new mission and vision - to achieve "smarter, safer and more environmentally friendly" mobility. Reflected in the strategic layout, Joyson has increased its layout and investment in the research of automotive intelligent driving, new energy and automation equipment, and established corresponding research institutes. At the same time, another business unit of Joyson also began to be established - Joyson Security.
"Cars are evolving at a rapid pace, and we've seen some crises in the industry, and we've been talking about what is hard to disrupt. At that time, in accordance with the three directions of 'smarter, safer and more environmentally friendly', Joyson looked at many potential investment targets in the auto parts industry. Some targets were profitable at the time, but gave up because they did not meet these three directions. Finally, car safetyWe believe that no matter how the car changes, it is a must. According to the recollection of people who have participated in the integration of the Joyson series of mergers and acquisitions.
In 2016, Joyson acquired KSS, the world's fourth-largest automotive safety technology supplier at the time, and officially entered the field of automotive safety. In 2018, Joyson acquired the high-quality assets of Japan's Takata Corporation, becoming the world's second largest automotive safety system supplier. Since then, Joyson Electronics has integrated its automotive safety business.
(Joyson Safety Plant)
"With the acquisition of Preh, Joyson has truly become an international company, with overseas business and markets, and Preh has focused on expanding the Chinese market. After the acquisition of KSS and Takata, Joyson can be regarded as a truly global company with global operations. An industry insider commented.
Unfortunately, at the critical end of the integration, Joyson, like all global companies, suffered a systemic shock.
The first is the impact of the epidemic, which not only disrupted the global production, logistics, and supply chain, but also severely affected the local supply, and many factories stopped production. However, after the shutdown, the daily fixed costs such as personnel salaries, water and electricity will not be reduced. International travel restrictions have brought people-to-people exchanges to a virtual standstill. This was followed by the shortage of cores, the rise in the price of bulk products caused by global inflation, the sharp rise in the cost of raw materials, and the imbalance in the global capacity structure led to a further increase in international transportation costs.
All businesses have no choice. Joyson was the same, at that time, it could only be "stiff", and the cash flow pressure once soared. In order to ensure safe business operations and integration, Joyson even sold some high-quality assets to return to blood.
"I'm not afraid of difficulties, I'm not afraid of slow improvement, as long as everyone can do things, they won't be so anxious." A mid-level executive involved in the Joyson security integration recalls the state of affairs at that time.
At the end of 2019, Joyson Security Asia was the first to complete the integration, when Chen Wei, the current president of Joyson Electronics, was in charge. He breaks down the layers of sales, purchasing, operations, and management into actionable actions. "One is to analyze systematically and structurally, and build an integrated structure; the second is to find the right person and let more capable people manage it; The third is to pay attention to the landing, and hold daily meetings to track and ensure the landing, and there is no other trick. "
The integration of security services in other regions cannot wait any longer. In the middle of 2021, when the global epidemic was at its most complicated, Chen Wei led a team to Europe to lead the integration of the security business in Europe, and the European region also improved rapidly. The successful experience of Asia has been rapidly pushed to the world, and the systematic approach has gradually taken effect overseas.
In addition to cost control, cross-regional resource collaboration, optimization of the global supply chain system, adjustment of resource allocation between high-cost countries/regions and advantage-cost countries/regions, and even the closure and integration of some inefficient overseas factories. In terms of organizational structure optimization, Joyson Safety has also adjusted some regional management teams, especially the Chinese team to improve the performance of overseas core factories.
2023 is a key year for Joyson to get out of the "trough" of integration. This year, Joyson's automotive safety business finally got rid of losses, and all four major business regions in the world achieved profitability, completing the "squat jump". Joyson Electronics' operating income increased by 12% year-on-year to 55.7 billion yuan, and the net profit attributable to the parent company was 1.08 billion yuan, a year-on-year increase of 175%, returning to the 1 billion yuan mark.
Open high and start a business and rush out of the red sea of the market
Joyson's ability to complete such a large-scale global integration of the automotive safety business is closely related to its entrepreneurial background.
In the late 90s of the last century, China's auto industry began to take off, but local auto parts companies are still in the stage of low-tech "foundry" mode, 90% of which copy foreign products and "fight" with prices in the downstream of the industrial chain. At the same time, the automotive electronics industry has risen rapidly overseas, and the penetration rate of electronic products in automobiles has soared. At that time, there was not a single Chinese company among the automotive electronics design suppliers.
How to break this situation has become a long-term problem for Wang Jianfeng.
Prior to the establishment of Joyson, Wang Jianfeng had been immersed in the auto parts industry for nearly 10 years. He not only made the output value of a local auto parts enterprise in Ningbo several million yuan, but also made a small achievement; He also served as the general manager of the China joint venture of the world's top 500 American Tianhe Automobile Group Company, which soared the sales revenue of the joint venture from several million yuan to 120 million yuan.
After five years of training in Trina, Wang Jianfeng believes that the time is basically ripe. In 2004, Wang Jianfeng founded Joyson and formed an entrepreneurial team of design, manufacturing and sales experts, and decided to start from scratch.
The highly profitable automotive electronics market has become Wang Jianfeng's goal. He believes that there will be a huge potential market for automotive electronics in the future.
(Wang Jianfeng, founder of Joyson)
Although he has been in the industry for more than ten years, it is not easy to get a foothold.
Joyson's first and foremost problem is survival. At that time, the development and production of China's automotive electronic products were mainly monopolized by international auto parts giants, even if some Chinese companies cut into the field of automotive electronics, they could only produce DVD, audio, reversing radar and other low-tech supporting products.
The competition for low-threshold products is fierce, and high-threshold products cannot be produced, which has become a common situation for Chinese auto parts enterprises, and must find another way to develop. The founding team of senior industry experts allowed Joyson to establish a clear strategy, goals and path to achieve from the beginning.
Joyson has determined to solve the problem of survival by designing and developing in tandem with automobile manufacturers. In Wang Jianfeng's view, if there is no design that meets the needs of customers and only manufacturing, it is difficult for Joyson to open a gap with its competitors; If you can get the design qualification of the OEM's products, it will become logical to get the manufacturing qualification, and you can stand on the commanding heights of the industrial chain. To this end, Joyson has set up a design team to tailor solutions for OEMs.
Synchronous design is not enough. "When the problem of survival is solved, scale becomes the bottleneck of development, and then this problem can be solved through extension mergers and acquisitions and the integration of existing domestic resources. While solving the scale effect, we should pay more attention to the breakthrough in technology and the upgrading of the industry, which is to become bigger and stronger in the real sense, otherwise the scale alone can only be big but not strong. After achieving technological breakthroughs and becoming bigger and stronger, it is logical to enter the capital market by issuing shares to the public and going public. Wang Jianfeng's judgment at that time.
This judgment determines the development of Joyson in the next 20 years, and "focusing on the manufacturing industry, supplemented by capital operation, and the two-wheel drive model of capital operation platform conforming to the development of manufacturing industry" has become the core strategic realization path.
In order to make the strategy smoothly implemented, Joyson "opened high", surpassed its competitors in talent and resource investment at the beginning, kept up with international giants, and invested resources that competitors may only invest in years or even ten years in the first year or two. In order to strengthen independent research and development, Joyson has hired automotive electronics talents and has become a specialized automotive electronics company. At that time, Joyson's annual sales were only 20 million, and the talents it introduced had reached an annual salary of 1 million.
(2004 Joyson Office Building)
The strategy worked.
In 2005, Joyson became a supplier of Volkswagen and made a name for itself with many innovations in its products. In 2006, Joyson established a production base in Changchun, and successively supplied car brands such as Volkswagen, General Motors, and Ford. In 2007, Joyson's sales have reached 100 million yuan.
The merger and acquisition of Preh ignited the two-wheel drive engine of "industry + capital".
Due to the low technical barriers to design innovation, the protection of intellectual property rights in China was not perfect at that time, and the absence of disruptive innovation meant that products could quickly be copied and imitated by peers. Due to R&D investment, Joyson has greater cost pressure than its peers who choose to copy and imitate. By 2008, the gross profit margin of China's auto parts companies has dropped from about 50% to 10%, and the price war has become more and more intense. Although Joyson can still maintain a certain bargaining power, the advantage is no longer obvious.
Joyson urgently needed to expand and build a moat.
In order to quickly form a competitive advantage, Joyson began to look for valuable M&A targets at home and abroad, and the two-wheel drive development model of industry and capital officially pressed the "start button".
Today, looking at the road of Joyson's mergers and acquisitions, there are two main lines: one is to break the business ceiling around the field of auto parts, realize the company's industry track jump, rapidly expand the scale, enter the field of automotive electronics, automotive safety, and intelligent manufacturing, and establish a moat; The other is to quickly strengthen each business line, acquire a number of companies around automotive electronics and automotive safety, and quickly form competitiveness and strengthen the moat while acquiring.
The times provided a once-in-a-lifetime opportunity for Joyson at that time.
In 2007, when the financial crisis swept the world, a large number of high-quality overseas assets were forced to seek global buyers. The shareholders of the German automotive electronics company Preh, which had previously impressed Joyson, are also looking for potential buyers.
Founded in 1919, Preh started the production of electronic components, developed the first automotive air conditioning controller and other products, and is an out-and-out century-old auto parts supplier. By 2010, Preh was the world's seventh largest company in the number of automotive electronics patents, with sales and production bases in five countries, and its customers also included BMW, Mercedes-Benz, Rolls-Royce, Volkswagen and General Motors and other international automotive brands, and the world's leading automotive high-end electronic control system level modules.
Joyson and Preh have been in contact since 2006. Preh hopes to set up a joint venture in China to meet the needs of customers in the Chinese market and at the same time develop the Chinese market. Joyson was one of the potential partners at the time, but it didn't work out.
In 2008, after learning that Preh's shareholder, DBAG Fund, wanted to sell Preh's shares, Joyson soon invited Preh's management to China. At that time, Joyson was still working in a small factory and had just acquired a piece of land to build a new industrial park. Wang Jianfeng presented all the drawings of the industrial park to Preh's senior management team, and explained Joyson's strategic plan to develop a new industrial park.
According to Wang Jianfeng's recollection, it was clear that Preh's senior management team did not think that these strategic plans would be implemented at that time, and even if they did, they would not be possible within one year. This time, Joyson did not convince Preh's management sufficiently.
Preh wasn't the only acquisition target for Joyson to enter automotive electronics at the time. In 2009, Joyson Electronics successfully acquired Shanghai Huade, the second Sino-German joint venture in Shanghai, also known as one of the "four golden flowers" of Shanghai's auto parts industry. The company is a joint venture between a long-established German automotive electronics supplier and a Chinese company, and mainly produces products such as automotive rearview mirrors. After Joyson's acquisition of Huade, its product line, industrial chain and market share have increased significantly.
Through the M&A and integration of Shanghai Huade, Joyson has not only optimized the allocation of domestic technology, products, personnel, markets and customers, but more importantly, accumulated first-hand experience in M&A and integration, which has become the foundation for rapid growth in the future. This merger and acquisition integration is also a "proofing" for the next step of the merger and acquisition of German Preh.
In 2009, when Preh executives came to Ningbo again, the new Joyson plant, which had been on the drawing sheet the previous year, had been completed. Not only did Joyson's integrity impress Preh executives, but they were also impressed by their efficiency and execution. In addition, Joyson's M&A team also formulated a detailed report on the development of the Chinese market that Preh is most concerned about, and the professionalism and persistence of the senior management team convinced Preh that Joyson could really run Preh well.
Negotiations for the acquisition of Preh began. In order not to miss the opportunity of acquisition, in April 2011, Joyson first signed a contract with Preh to acquire 74.9% of the shares of Preh for 1.6 billion yuan.
(Joyson acquires Preh in Germany)
At the same time as the acquisition of Preh, another thing of Joyson Electronics was also in full swing - listing. Joyson wants to complete overseas mergers and acquisitions, landing in the capital market is a prerequisite, otherwise it is difficult to raise the funds required for mergers and acquisitions without strong equity financing wages. If it cannot be listed, the debt ratio of Joyson M&A Preh will rise sharply; If the listing process is too slow, the opportunity to acquire Preh will be missed. "Preh has already appeared in the market, and time is running out, and if it is missed, it may delay the company's development by 5 years."
Two extremely difficult things, Equals succeeded.
In December 2011, Joyson Electronics successfully landed in the capital market through backdoor trading. After the completion of the listing, Joyson bought 100% of the shares of Preh and officially pocketed this German "treasure". Through the integration and synergy with Joyson, Preh has achieved significant growth in sales and profits, and Joyson has gained technology, overseas markets, and valuable experience.
(Joyson Ningbo factory automation production line)
Since then, Joyson Electronics has screened a number of high-quality targets from around the world, and has successively acquired Quin Gmbh, a German high-end automobile brand company that provides interior parts and high-end steering wheel assemblies, TS, a German in-vehicle information system, navigation and driving assistance system company, KSS, an American automotive safety company, EVANA, an American industrial robot and automation system company, and Takata high-quality assets of Japan. In addition to entering the fields of automotive safety and industrial robots, which have high barriers, we have also acquired technologies, global customers, and production capacity that are difficult to acquire in a short period of time through our own accumulation.
Like the automotive safety business, Joyson is also integrating in the fields of automotive electronics and industrial robots. In the past decade, on the basis of the existing advantages of intelligent cockpit, Joyson's automotive electronics business has successively expanded into new areas with great future development potential, such as new energy management, intelligent networking, and intelligent driving. The industrial robot-related business acquired by Joyson has gradually integrated into an independent intelligent manufacturing company, PIA Intelligence, and successfully listed on the Science and Technology Innovation Board in 2022.
Thousands of sails have passed, and Joyson ushers in spring
The market has changed.
In recent years, the global automobile industry has been changing dramatically, and the domestic industry has been competing.
At this time, Joyson is no longer a "small sampan" in the Yongjiang River, but a "giant ship" riding the wind and waves in the sea, overcoming obstacles in a higher-dimensional global market. How to make the greatest use of the resources, technology and scale advantages that have been formed to achieve a leap forward in global competitiveness is a problem considered by Joyson today.
The wind of the times is coming again. The accelerated evolution of the "New Four Modernizations" of automobiles has brought business opportunities for multi-faceted industrial chain upgrading, and China's new energy vehicle industry has exploded and gone overseas.
"At present, the iteration of artificial intelligence technology is accelerating, and the transformation wave of global automobiles is surging. In the new year, opportunities and challenges coexist in the global automobile market, the global political and economic environment is still complex, the competition in the automobile market is more intense, and the automobile industry has 'rolled' from China to overseas, and Chinese cars are running forward and actively going to sea. At the annual working meeting of Joyson Group in January 24, Wang Jianfeng judged the market as follows, "Joyson Group is encountering unprecedented development opportunities. Joyson is entering a new stage of vigor, and through continuous efforts and iterations, we will usher in a future that truly belongs to Joyson. "
The confidence of Joyson comes from the core competitiveness and barriers established by the advanced layout.
The comprehensive layout of the core industrial chain is a major advantage of Joyson, which also means that there is also this huge potential for business synergy.
Compared with other peers who mainly make a certain type of products, its industrial chain layout includes not only the automotive "infrastructure" automotive safety business, but also the automotive electronics business, which is accounting for an increasing proportion of automobile costs.
In terms of automotive safety, there are not only steering wheels, seat belts, and traditional safety "three-piece sets" of airbags, but also DMS (driver monitoring system) active safety products that adapt to new energy and intelligent driving, PBD high-voltage circuit breakers and other products, and also develop a new "leap" airbag suitable for the era of large screens.
In the automotive electronics business, whether it is in the field of intelligent cockpit human-computer interaction, or intelligent driving core domain control, intelligent network products, and new energy solutions covering the full voltage platform, there are mature products or solutions.
The business and customer resource moat is deep enough, which is another core competitiveness of Joyson.
For example, there are many legal requirements for automotive safety products, high technical standards, product research and development, certification is not only high, but also the technology accumulation and investment cycle is difficult for new suppliers to bear, the world's three major suppliers occupy the main market share, and Joyson occupies the second market share. In addition, Joyson has established cooperative relations with almost all major global car companies, and has supporting factories around the world to respond to customer needs, which is difficult for ordinary auto parts suppliers to meet the same standards.
The early completion of the global layout is a unique advantage of Joyson compared with its Chinese counterparts. In the tide of Chinese automobiles going overseas, compared with the start of going overseas, the advantages of Joyson's global layout are more conspicuous.
Joyson's global layout is basically anchored in three major automotive industry chain clusters, with a number of core research centers and production plants in major automobile producing countries around the world: a North American industrial chain cluster with the United States as the core and maintained by the USMCA agreement has been formed; With Germany and France as the core, it radiates the European industrial chain cluster in Central and Eastern Europe; It is an Asian industrial chain cluster with China, Japan and South Korea as the core. Joyson's overseas business accounts for nearly 80% of its revenue, and it is also helping a number of Chinese car companies to explore overseas markets.
(Joyson set up R&D and production bases around the world)
The development of China's new energy vehicle industry has led the world, and China's production and manufacturing supply chain and cost advantages are still obvious. Expanding investment in the Chinese market is also the focus of Joyson's development.
In 2023, Joyson Electronics' automotive safety Hefei plant in Anhui Province will be officially put into operation. In 2024, Joyson Group announced that it will build a new innovation industrial park covering an area of 150 acres in Ningbo, which will include an automotive electronics and automotive safety product R&D center and an intelligent production base, with a total investment of 3 billion yuan. It is reported that this industrial park is already accelerating or construction is about to start.
2024 marks the 20th anniversary of Joyson. At the annual work meeting, Wang Jianfeng and the management team reached five consensus on future development, and determined a new development direction for Joyson:
Joyson will continue to promote the significant improvement of technology, operation and production capacity, and lead the market segment with more competitive products; It is necessary to optimize supply chain management, further significantly reduce costs and improve profit margins; It is necessary to integrate data and reality, and accelerate self-improvement with the help of AI applications; It is necessary to strengthen mutual cooperation between business divisions, continue to integrate and optimize, and achieve a high degree of coordination between them; We will further amplify the advantages of global layout and become the preferred partner of China's automotive industry to go overseas.
In the next 20 years, Joyson is in full swing.