Chinese automotive fuel-tank molder Yangzhou Auto Plastic Parts Co. Ltd. has spurned its European partner, Paris-based Inergy Automotive Systems.
The company called Yapp will now proceed on its own, thank you.
In a Page 1 story in Plastics News' Feb. 20 issue, Yapp's rejection of Inergy — a year after Inergy announced plans to buy 55 percent of the government-owned fuel systems supplier — was characterized as a surprise move.
But a new day is dawning. This muscle flexing by Chinese manufacturers is really not all that surprising, and it will continue.
Huge sums of investment money flow into China every year. In the past, Chinese plastics companies followed a similar formula: Team up with a Western company, allow that global supplier to call the shots, bring in new technology and teach local executives Western skills of management, marketing and sales.
Since they began working together in 2001, Yapp had followed that familiar story line. As Yapp President Sun Yan told Plastics News' China correspondent Katherine Sima, access to multilayer fuel-tank technology was the main reason his company considered a joint venture that would have given majority ownership to Inergy.
But Yapp officials reconsidered, as the world's automakers flock to open factories in China. Automakers, hungry for a good source of plastic fuel systems, were eager to help with technological advice. Yapp's blow molding machinery makers from Germany, Kautex Maschinenbau GmbH and Bekum Maschinenfabriken GmbH, are hungry for sales and have decades of expertise to share.
And business is booming. Yangzhou-based Yapp expects to produce 1.3 million fuel tanks this year at its four blow molding factories in China, up from 850,000 in 2005. Yapp is No. 1 in China, and officials feel they can afford to remain independent.
Another reason the Inergy deal was scotched involves an issue that is strictly Chinese. Government regulations say employees of the state-owned company get to vote on a potential acquisition before the firm's board of directors and shareholders approve the deal.
The workers vetoed Inergy's bid.
Now Inergy is looking at starting its own fuel-tank factories in China. And Sun and the other Yapp leaders are looking to produce tanks in Thailand and India, through joint ventures.
China remains a work in progress — a work in progress that moves at lightning speed. Big Chinese companies like appliance maker Haier Group and computer maker Lenovo Group Ltd. have made moves that, just five years ago, would have shocked the Western business world. Haier unsuccessfully bid to buy U.S. stalwart Maytag Corp. In a blockbuster deal, Lenovo bought IBM Corp.'s personal computer division.
To U.S. eyes, those kinds of headlines certainly grab attention. Lenovo and Haier are both sponsors of the 2008 Summer Olympics in Beijing, further spotlighting them as global brands.
“Yangzhou Auto Plastic Parts” doesn't roll off the Western tongue easily. But, as the Yapp/Inergy story shows, China's ascendancy has many other angles.