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Experts Views on Foreign Acquisition in Manufacturing Industry
Previously, the Schaeffler Group was regarded as an "innocent victim" of the so-called "State Economic Security Concern" when they tried, in vain, to acquire Luoyang Bearing Group(LBG), the founder of "LYC" brand. However, the standard by which we can judge a safe foreign acquisition is still not clear.
Therefore, journalist from China Business(CB) interviewed Zhao ying, analyst from Chinese Accademy of Social Science(CASS) and Ma guangyuan, sophisticated lawyer to know their viewpoints on such issue.
CB: on LYC-Shaeffler acquisition, there are many different opinions. By what standard should we judge the safety of acquisitions like this?
Zhao: Foreign enterprises should carry out acquisition according to the latest provisions published by state authority, such as the "Notification on Equity Transfer of State-Owned Enterprise"(hereinafter refered to as "the Notification") just announced by SASAC.
Compared with XCMG(Xuzhou Construction Machine Group), LBG is more responsible for preserving state security. The special and precision bearings made by them are critical components on military products and large-size high tech equipments. That's something being restricted from transportation in other countries. Thus, LYC-acquisition bear on state and economic security rather than just a deal depending on the price.
Ma: Whether a foreign acquisition is allowable or not depend on what will be sold in the deal. If no military business is involved in the acquisition, that's nothing serious. As I knew, Schaeffler intended to acquire the non-military segment of LBG. If so, I think it's acceptable that LBG transfer part of their business to foreign enterprises transparently.
The reason is simple. Schaeffler was willing to spend 1.1 billion yuan which is the highest quotation among all contenders connected to the acquisition and they proposed systematic scheme on worker settlement and management reform. Instead, Yongcheng Coal & Electricity Group quote a lower price. As a layman in bearing industry, they might face many difficulties after the acquisition. Based on the market, it's a good choice for LBG to be acquired by Shaeffler Group.
CB: Before the LYC's case, XCMG and Supor had also raised similar discussions. Is foreign acquisition a serious difficulty in the future? How do cope with it?
Ma: You're right, it is so difficult a problem to cope with. As a promising market, China attract increasing number of foreign enterprises; foreign acquisition is inevitable. But there are no sound policy system to regulate it now. Acquisition can lead to reranking of enterprises in the same area. Therefore, such issue will be a lasting one. Economic security and out-flow of national resources are expected to be the frequently mentioned words. Similar cases will appare agine in future, sooner or later.
Zhao: At present, relavant authorities have made it clear that acquiring state-owned enterprises should be conducted according to certain regulations. Foreign acquisition should be carried out in an orderly way rather than blindly. The financial crisis in Latin America was caused by irrational opening up.
Besides, safe foreign acquistion should be transparent, bringing about the value preserving and adding of state assets.
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| AH3076H bearing | 380 | ||
| AH3076G-H bearing | 380 |