Cowin Auto sale -- a reexamination
Apparently we all have been deluded. By "we all", I mean myself as well as all those journalists and reporters publishing hundreds of articles, in Chinese, English and other languages (
example,
example), on the Cowin share transfer to Yibin AIDIC.
Our friend Erik has pointed out to me that this Wuhu Cowin Automobile (now Yibin Cowin) is not the auto-producing company but a spare parts company established in 2014. He bases his opinion on the business scope mentioned in the screenshot from the govt. site attached in the post above. The scope says (translated) "Automobile and parts and components manufacturing...automobile and auto zero parts sales..." etc. So it can be interpreted as an automobile company or an auto parts company.
So what is it? I set out to examine the issue further.
Cowin cars are sold by a company called "Cowin Automobile Sales Co., Ltd." However, Cowin cars are made by two companies. Cowin vehicles have NDRC codes starting with both SQR and WHJ. SQR enterprise code refers to Chery Automobile Co., Ltd. whereas WHJ code refers to Wuhu Kaiyi Automobile Co., Ltd. The
production locations are 8 Changchun Road, Wuhu, and Dalian Free Trade Zone in the case of Chery, and 9 Anshan Road, Wuhu, for Cowin. 8 Changchun Road and 9 Anshan Road are part of a huge industrial complex, so obviously Chery is sharing the facility with Cowin. So far so good.
Now, when I look at registered addresses, there is a problem: In company bureau records, Wuhu Kaiyi Automobile Co., Ltd. had the address Jiangbei Industrial Zone, Building B, Anhui. In MIIT records, Wuhu Kaiyi Automobile Co., Ltd. has the address Wanli Airport, Wuhu.
Remember, Wuhu Kaiyi has a complicated history. When it was set up as the "Jiangbei project", there were three founders: Anhui Jiangbei Development Co., Ltd., Chery Commercial Vehicle (Anhui) Co., Ltd., and Wuhu Construction Investment Co., Ltd. Also, in early 2014, the PLA No. 5720 Factory, situated at Wanli Airport, was acquired either by Chery Auto or Chery Holdings and
renamed Anhui Ruihong Automobile Co, Ltd. Subsequently, Anhui Ruihong was renamed Wuhu Kaiyi Automobile Co., Ltd. with its registered address
changed to Jiangbei Industrial Zone, Building B. It is thus implied that there was a merger between the two entities: the "Jiangbei project" and the PLA No. 5720 Factory successor into one company. It appears that the Wanli Airport address appearing in MIIT records has not been updated. In the company bureau records, the original three shareholders are not mentioned; the single shareholder is shown as Chery Automobile Co. Ltd. So, at some indefinite point in time prior to this merger, the original three founders must have divested their stakes in favor of Chery Auto.
When Wuhu Kaiyi (Jiangbei project) was originally founded, it did not have a car production license. At that stage, it may have been just a "spare parts company" as Erik puts it. It was actually the acquisition of the PLA No. 5720 Factory, which possessed a car production license, and the subsequent merger (more like a reverse merger) that enabled the "combined" Wuhu Kaiyi to have access to a car production license. We already know that companies execute such mergers with idle car/CV companies to get the "coveted" licenses, as we have seen recently in the cases of Bisu or Hanteng.
So, that is the story. The company that Yibin AIDIC acquired is indeed a car-producing company, and not just a parts company. Yibin city paid 2.5 bn RMB for a 51% stake, valuing the company at around 5 bn RMB ($800 mn). Yibin city perhaps did not pay this sum merely for an auto plant, although it does allow the company to continue producing cars at Chery's Wuhu complex as Chery still holds 49%; it is highly unlikely they are coveting the old aircraft plant at Wanli Airport; moreover Yibin is already creating an auto industrial complex in Lingang. It is therefore the same old tale about getting a license. Irrespective of whether Yibin continues with "Cowin" or creates new brands down the road for Yibin-made vehicles, it will need the license for producing vehicles at its upcoming complex. Yibin city has no experience in making modern cars as far as I know, thus Chery's retention as partner for the latter's experience, guidance, technologies, and expertise.
Postscript: Yibin Wuliangye group has denied that it is looking at getting into car manufacture and accused the media of over-interpreting and misrepresenting facts; it says if that were so, it would not have taken merely a 0.5% stake (through Pushi). Pushi is interested marginally because of some synergy with the parts-making aspect of Cowin; otherwise the Cowin acquisition is totally the decision of the Yibin city administration (
link).
TLDR: No TLDR. Go read the whole damn thing!
