Date: 2013-07-31

Xibei Bearing's Painful Cooperation with FAG

Xibei Bearing's Painful Cooperation with FAG

Recently, FAG again visited Xibei Bearing Stock Co.,Ltd to seek a cooperation with them on the ultra large-size bearings for petroleum equipments. However, Mr.Li shuming, chairman of Xibei Bearing, gave FAG a resolute answer "No! At least we will not cooperate with them by such means that we had employed in the previous railway bearing's joint venture."

The story should be started since the end of 2001 when Xibei Bearing had taken one quarter's market share of railway bearings in China and became the flagship in domestic railway bearing industry. However, an thoughtless cooperation with FAG forced them giving up all their railway bearing segment, including all railway bearings' production qualifications and intellectual property right.

Xibei Bearing, located in Ningxia province, is one of the 6 largest bearing producers in China and the largest bearing producer in northwest China. As a State Railway Ministry authorized enterprise, Xibei Bearing's annual profit were RMB20 million before their cooperation with FAG.

April 1996, they became the first listed bearing enterprise (Shenzhen Exchange: Xibeizhoucheng 000595) in China. In order to realize allotment of shares, Xibei Bearing expanded their production and raised an additional RMB80 million. But products were not sold as fast as they desired, so they met a financial crisis.

Just at that time, Xibei Bearing knew that FAG, the third largest bearing manufacturer in the world, were seeking a Chinese partner to form a joint venture. With a desire to introduce high technologies and investment, Xibei Bearing began their negotiation with FAG in 2000. Two years later, the both parties reached an agreement that FAG provided cash and technology investment (before cooperating with Xibei Bearing, FAG had no experience in railway bearings production); Xibei Bearing provided the railway bearing

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