The corporate governance structure based on the compromise of interests between the management and the local government makes it conclusive that Brilliance Automotive has taken a road that cannot see the future. Few people can see the future of Brilliance Automotive. After experiencing the “property rights crisis†in which Yang Rong left for the outcome, Brilliance Automotive was once again in crisis. At the beginning of July, Wu Xiaoan, Su Qiang, Hong Xing, and He Tao, who were once the four king of Yang Rong’s era, continuously sold their holdings of Brilliance’s shares and even rumors of resignations. Brilliance China is the controlling shareholder of Brilliance Jinbei which currently produces Jinbei Automobile and Zhonghua Sedan, and is also an indirect controlling shareholder of Brilliance Automotive. Brilliance China has grown into a mutual support for passenger cars and commercial vehicles. Auto companies with their own brands and joint venture brands are on the move. As the business takes off, why did the company's executives make such moves? Local forces have used the power of international capital to integrate the domestic auto industry and realize the road of national automobile manufacturing—this model has been widely appreciated. But two years ago, when the Liaoning provincial government decided to expel Yang Rong, the company that was once thought to create a new model for Chinese cars began to embark on a path of decline that could not be looked back. The departure of Yang Rong distorted Brilliance’s corporate governance structure. The transfer of property rights made the company face challenges from the initial management structure established in accordance with market principles. Brilliance’s governance structure has become a compromise between the local government and professional managers. . A company without strong leaders, and management and local governments lacking unified value recognition; a company with high inventory and lack of new products, a company that still learns basic automotive knowledge and technology that completely depends on external support, there will be a What kind of future? When the government decided to expel Yang Rong, the soulless Brilliance had already planted the bomb that Hua Chen was declining. In all fairness, the golden period for the development of automobiles in Shenyang was in the era of Yangrong's control of Brilliance. At that time, the government and the company made concerted efforts not only to shape the Jinbei Auto into the van that sold the first in the country, but also to create a stable Chinese car that was difficult but smooth. After Yang Rong left, although the high-level executives of Brilliance still stayed, the overall environment changed, and the relationship between the government and business managers changed from synergy to wrestling and from cooperation to confrontation. For Brilliance, the government and corporate managers acted like two captains, leading Brilliance into the river without buoys. The reason why Yang Rong’s four King Kong eventually deserted Yang Rong was two reasons: First, corporate control changed hands; they were unwilling to hand over companies that were struggling to make new ventures; and second, their interest in Brilliance could be maximized. Guaranteed. June 18, 2002 is the last day of the showdown for all parties, because the second day of the State Council office will discuss whether to pass the project proposal of joint venture between BMW Brilliance and BMW. On the board of directors of Brilliance Automotive on the same day, Yang Rong was relieved of the position of Chairman, President, and Chief Executive Officer of the company, retaining only executive director positions. At this time, management and Yang Rong parted ways. On June 19, the joint venture project proposal between Brilliance and BMW was approved. While suppressing Yangrong, the Liaoning provincial government promised management to subscribe for stock options at a low price. Wu Xiaoan, who took over as Chairman of Brilliance Automotive, can subscribe for more than 9500 million shares of Brilliance Automotive at a price of HK$0.95 and HK$1.896 respectively. , Hong Xing, He Tao's remaining three people are more than 86 million shares per person. Brilliance Automotive announced in Beijing that the company has become a state-controlled listed company controlled by the Liaoning Provincial Government. The management team has basically maintained the original staff of the Yangrong Times, but it has only added a director of the Shenyang Municipal Government. At the time when management had abandoned Yang Rong, Yang Rong only expressed one sigh: “God knows what they are doing.†But so far, the stock options promised by the Liaoning provincial government have not been honored. Su Qiang told the government to take over Brilliance: "We are only professional managers. We are serving the interests of all shareholders." He still respects Yang Rong as "Yang Zong." Analysts believe that the negotiations between the management and the government must have been going on. Selling stocks and rumors of resignation are all pressures from management on the government. This pressure has multiplied through the stock market and the media. There are good reasons for suggesting that at the time media reported that the resignation of management should be the intentional move of the Four King Kong. At that time, no less than three mainstream financial media in China had reported the news at almost the same time. The publisher of the clues clearly stated that it was some of the original Brilliance Gold Cup executives. The facts listed in several media reports are basically the same, and the figures provided by the top management to the media about the Brilliance Jinbei and the data given by the Brilliance Jinbei official also do not differ greatly. Once the talks break down, the fall of management is also a matter of time. This is undoubtedly a disaster for Brilliance, which is still in its infancy. Then, the four King Kongs refused to resign and rumors that the sale of the stocks acquired during the Yangrong era was interpreted by them as cash preparation for the subscription of the government’s options to them. This kind of confession can be described as a double-edged sword, which can ease the outside world's suspicion and force the government not to destroy the contract. After the resignation rumors broke out, in a conversation with the reporter, although Su Qiang indicated that he would not resign, he did not indicate when he would not resign. He said unequivocally that the options would go dry. Its implication is that if the government still fails to honor its commitments, the Soviet Union will certainly resign. No one can imagine what would happen if Brilliance lost four King Kong. How to handle the issue of management options is only a concentrated expression of all contradictions. Brilliance who has lost its strong founder has no soul. The key to thoroughly solving the issue of Brilliance's governance structure is still to replace the mechanism of interest compromise. This is the ultimate problem that tests the wisdom of both parties. There is another answer to the interpretation of the resignation crisis of Brilliance management by Chinese cars that have no knowledge of property rights: Brilliance Jinbei’s business is bleak. This is not only one of the reasons why management sells its shares, but also the government of Liaoning Province honors Su Qiang and others. Reason for hesitation of options. After Liaoning Province was granted control of Brilliance China, the management who was eager to make Brilliance China bigger and stronger hoped to receive full support from Liaoning's policies and funding. However, the Liaoning Provincial Government did not do this. For Liaoning Province, they hope that Su Qiang and others can quickly make achievements to prove that Brilliance Cars can do better under the jurisdiction of Liaoning Province than Yang Rong’s “unified rivers and lakesâ€. Since last year, the slowdown in sales growth in the auto market and the intensified competition have caused Su Qiang and others to fail to achieve their business objectives. This creates a "diaphragm" between business owners and managers. Unconfirmed information shows that: Brilliance Jinbei has increased its inventories since the beginning of this year, and the funds have been problematic. Liaoning Province attributed this to management’s ineffectiveness. Brilliance Jinbei denied such rumors, and its August 2 statement stated that Brilliance China’s Zhonghua Sedan and Jinbei Commercial Vehicles have always been sold in accordance with market changes, and the inventory is currently at a reasonable level; the capital chain is operating normally; Huge inventory and capital outages are inconsistent with the facts. In July of this year, 3,800 Chinese cars were in stock and 10,700 were stored in Jinbei Haishi, which means that there is almost no place to park newly-built vehicles in the factory of Huachen Automobile. Inventories also accounted for at least 1.5 billion yuan in funds. This figure indicates that Brilliance’s cash flow has serious problems. The new Brilliance Jinbei vice president of marketing Zheng Yu said that so far, Jinbei's sales have been very good, Brilliance still maintains the status of the domestic market leader in commercial vehicles and light passengers, Chinese cars have sold nearly 10,000 this year from January to July Vehicles, there is no large inventory of the argument. In the first half of last year, sales of Brilliance Automotive were 15,000 vehicles. A spokesperson for Brilliance Jinbei said that the company was in a profitable state during the first half of this year. Su Qiang once said: "Our point of breakeven is 15,000 vehicles." This year, the Chinese car has significantly reduced its price, but its sales volume has declined. It seems that Brilliance must be profitable even if it makes a profit. The baffling of Brilliance Jinbei lies in the weakness of its products. Brilliance once relied on a product package of Jinbei Haishi, but with the listing of similar domestic products, its competitiveness has shown a downward trend. If the Gold Cup barely occupies half of the same model, then the monotony of the Chinese branded car products makes Su Qiang even more headache. Brilliance Jinbei’s independent intellectual property rights car has no property knowledge. Do not say R & D, is the ability to improve technology, Brilliance Gold Cup is also very weak. Su Qiang admitted that at the time Brilliance did Chinese, there was no basic knowledge of the car. "It's a good idea to spend tens of millions of yuan on the design of a model. We can't even mention our opinions," he said. Now, the Brilliance Jinbei has entered the second step of development to study the replacement models of China. However, besides relying on external forces for design, Brilliance can only do what it can do now. “For example, we feel that the models do not look good, but we still need solutions from others. Brilliance Jinbei hopes that by 2007, Brilliance will have the initiative in vehicle design to be able to make its own decisions,†said Su Qiang. In the second half of 2002, Brilliance launched the R&D project for the new M2 sedan under the participation of Pininfarina in Italy and Porsche in Germany. M2 has a length of 4.6 meters and is a Class B medium-sized passenger car. It has a variety of models and configurations, including a turbocharged engine jointly developed by Brilliance. It is therefore more suitable for private car owners and will be targeted at the family car market in 2005. "The M1 (now the Chinese car) was originally developed as a C-class official vehicle with a long and large body, and the target customer population is relatively narrow," said Su Qiang. It is said that various models of the A-class platform independently developed by M3 and Brilliance are also under development and will be put on the market in 2007 and 2008 respectively. Brilliance Jinbei side believes that M2 will change the weaknesses of the old M1. For Brilliance, which has a weak technical foundation, this is not an easy task. For the increasingly competitive Chinese auto market, the fate of M2 is still unpredictable. As Su Qiang himself put it: “Multinational companies have strong brand and financial advantages, and their own brands that are marginalized due to 'jungle benefits' will be eliminated first.†BMW itself cannot guarantee the decline of Huachen’s auto operation, but also because of high expectations previously placed on it. The Brilliance BMW joint venture survives hard. In the first four months of this year, the sales volume of the five domestically-made BMWs, including the BMW 3 Series and the 5 Series, was only 3,877. Wu Xiaoan once predicted that the joint venture will make profits in 2004. According to his data, the sales volume of the joint venture company reached 10,000 points at the break-even point, and the sales target of BMW Brilliance in 2004 was between 12,000 and 15,000 vehicles. The task is obviously not finished. In the global market, the relatively low-priced BMW 3 Series is the best-selling BMW product, accounting for about 3/5 of BMW's global sales, but this is not the case in China. Although the domestic BMW 3 Series is nearly 200,000 yuan cheaper than imported cars, it is clearly not recognized by consumers. What they care about is not the price, but whether the origin is pure and whether the car is wide and wide. The compact BMW 3 Series BMW 5 Series does not appear to be large, and the best BMW 7 Series sold in China cannot be produced in China. Brilliance Motors initially gave up its dominance in the joint venture company, hoping to obtain at least the profits of the joint venture company. Now it seems that this expectation is also a dream. According to the joint venture agreement between BMW and Brilliance, the registered capital of the company is 150 million euros and the total investment is 450 million euros, but the actual funds paid by both sides are limited. On the surface, Brilliance Motor Co., Ltd. contributed cash, but it changed hands and the joint venture company purchased the plant and equipment for the production of the Chinese sedan; the joint venture company’s purchase of BMW technology also prevented BMW from using excessive funds. In fact, the plant and equipment of the Zhonghua sedan have all belonged to the BMW Brilliance joint venture. The specific details are that Zhonghua Sedan hired a plant of the BMW Brilliance joint venture and commissioned the joint venture to manufacture the bodywork for the Chinese sedan. Brilliance Motors has to pay the lease fee for the joint venture company's plant, but also to pay the corresponding processing fees, but BMW has thus reduced a lot of burden. If the prospect of a joint venture is good, BMW Brilliance may continue to occupy the production capacity of the Chinese car after the domestic BMW planned capacity reached 30,000 units in 2005. If the situation in the joint venture is not good enough, and production capacity cannot continue to grow, then BMW’s retreat will be easier. Brilliance, which relies heavily on BMW, apparently can't bet too much on the joint venture company. However, the Chinese car can be born, BMW company contributed. As early as 2001 when the joint-venture negotiations were underway, BMW and Brilliance Automotive had reached an agreement on technical assistance for the Chinese car, and several batches of German BMW workers had come to the Chinese car production line. Su Qiang said: "The Chinese sedan is very important to BMW. If Huachen has three shorts and two shorts on the Chinese sedan project, the joint venture will not have a good prospect. This BMW knows very clearly." Now that the Chinese sedan has been born, Huachen The success of the Chinese sedan is not a concern for BMW. In the future, what Brilliance Automotive can only learn is the skills of the operation level. As Wu Xiaoan said: “We learn from BMW's experience and learn about their technology and management. It is from a very broad scope. For example, paint and other production processes are collinear, and workers are working under a factory building. Some technologies And experience can learn from them.†Even so, Brilliance cannot expect BMW to provide too much help in technology and R&D. This is a problem that all joint venture car companies in China will always face and that Brilliance cannot solve. . (Author: Fresh China)
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