“A monk has water to eat, two monks carry water to eat, and three monks have no water to eat. Our three (shareholders) are as big. How is your budget efficiency guaranteed?†At a press conference held in Beijing last week, Dongfeng Deputy General Manager Liu Weidong said bluntly.
On February 18, Dongfeng Motor and the Peugeot family and the French government signed a memorandum of understanding to acquire Peugeot Citroen (PSA). After a series of capital operations, Dongfeng Motor will purchase approximately 14% of PSA at the cost of injecting 800 million euros. It will become the largest shareholder of PSA with the French government and the Peugeot family.
Three equivalence major shareholders - the French government, the Peugeot family and the Chinese car companies. This kind of shareholding structure is extremely rare among multinational companies. Since the 90s of the last century, the cross-border restructuring of the automotive industry has had few successful cases. The French government’s shareholding in PSA triggered more questions from European consulting companies.
According to foreign media reports, the French government has taken action to limit Dongfeng Motor’s holding in the PSA Peugeot Citroen Group to prevent Dongfeng Motor from gaining control of the group after it became one of the largest shareholders. The French government added a clause in the agreement aimed at limiting Dongfeng Motor’s influence on PSA Peugeot Citroen. According to the clause, Dongfeng promised not to increase its stake in the next few years. This restriction also applies to the French government and the Peugeot family.
Bernstein Research analyst Max Warburton stated in an open letter to the Peugeot family’s Thierry Peugeot that with the involvement of the French government and Chinese state-owned companies, “PSA's operational efficiency, competitiveness and sales are difficult to quickly "The progress." Florent Couvreur, an analyst with CM-CIC Securities in Paris, said: "I don't understand why they are doing this. The three major shareholders have different starting points and are likely to cause controversy."
“We are aware of this concern and we want to coordinate a mechanism to make arrangements and confirmations for special needs at the shareholder level to ensure that the three parties have the same interests and reduce differences.†Liu Weidong said that the French government will not participate in PSA management. “They It is mainly the state-owned capital, so it is more of a capital investment relationship. We are more in the development of technology, Asia, and China. Therefore, we believe that the three parties have differences in their shareholdings and it is easy to find common ground."
Rebuilding top-level design is the first step to reach a balance. PSA has a two-tier design of the board of supervisors and the board of directors. The board of supervisors represents the shareholders and the board of directors is the professional manager system. According to the memorandum of understanding, 14 supervisors, Middle East Auto, French government, Peugeot family, and three major shareholders each sent two independent external supervisors. The chairman of the board of supervisors was an independent supervisor elected by three parties, and Dongfeng Motor’s supervisor was appointed as vice chairman of the board of supervisors. Chairman. The board of supervisors established a remuneration and nomination committee, an audit committee, and a strategy committee. The above three committees all have personnel of Dongfeng Motor.
“We have also considered some designs on the mechanism. For example, the board of supervisors requires that 50% of them be independent supervisors. This is not the case for the three of us. We try to make the board of supervisors smaller and more efficient in decision-making and ensure that the three shareholders will not be big. "Divergence." Liu Weidong said that in order to ensure the equivalence of the three shareholders, the agreement also abolished the double voting rights of the Peugeot family. Dongfeng Motor and the Peugeot Family own 14% of the double voting rights. Wait.
"A lot of companies are not operating well? It is the executive level who understands the above meanings differently, so I think this is also a problem that we Chinese companies face when they go out globally." Liu Weidong said, "This guarantees us no matter what (The board of supervisors) how to argue, the following implementation (board) is all professional, which can improve our execution efficiency."
The division of synergy and sphere of influence between Dongfeng Motor and the PSA global market is another layout that ensures the consistent interests of both parties. After Dongfeng Motor’s shareholding in PSA, a new Asian Business Development Committee was established. It consists of four committees. Dongfeng Motor’s representative serves as Chairman of the Asian Business Development Committee. Asia’s future development and major decision-making research are made by the Asian Commission.
In fact, the main body of PSA Asia's business development is the joint venture between PSA and Dongfeng Motors, which enables PSA to fully benefit from the expansion of Dongfeng Motor in the Asia Pacific region. According to the plan, Shenlong Motors will produce Dongfeng, Peugeot, and Citroen models, and PSA's import and sales network in China will be integrated into Shenlong's domestic sales channels. Dongfeng Motor hopes to use PSA to export in Asia, South America and Russia. This is an important step for Dongfeng Motor to take an international strategy. The return that PSA can receive is a further increase in sales in the Asia Pacific region. According to the agreement of both parties, Shenlong Motor’s 2020 sales target is 1.5 million.
However, whether the above goals can be achieved remains to be solved by how multi-party shareholders such as Dongfeng Motor Co., Ltd. overcome cultural integration and management obstacles.
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