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Chinese suppliers, with Beijing's blessing, embark on global buying spree


SHANGHAI -- A subsidiary of Ningbo Joyson Electronics Co. announced plans this week to acquire the assets of bankrupt Japanese airbag maker Takata Corp.
With the $1.6 billion deal, Joyson joins a wave of Chinese auto suppliers that have used major acquisitions to raise their global profile.
This is not a passing fad. Chinese suppliers can easily access the domestic stock market for capital, and they enjoy the central government's blessing.
For a long time, Chinese companies produced low-value components such as plastic interior trim, aluminum wheels and wire harnesses.
That began to change a decade ago, when they started acquiring companies in Europe and North America. The acquisitions were typically small and medium-sized automotive interior trim manufacturers and machinery makers.
The trend gained momentum in 2008-09, when the world slid into a severe economic crisis. China avoided the recession, and Chinese suppliers went shopping for Western technology.
They completed a slew of deals.
In 2010, Pacific Century Motors -- an investment company part-owned by the Beijing municipal government -- purchased Nexteer Automotive, General Motors' chief supplier of steering systems.
In 2011, the auto parts subsidiary of BAIC Motor Group bought Dutch automotive roof maker Inalfa Roof Systems Group BV.
Yanfeng Automotive Trim Systems Co. of Shanghai obtained a majority stake in Johnson Controls Inc.'s automotive interiors business in 2014.
The following year, state-owned Aviation Industry Corp. acquired Henniges Automotive Holdings Inc., a U.S. maker of sealants and vibration damping materials.
That same year, state-owned chemical maker China National Chemical Corp. bought Italian tire maker Pirelli.
Until 2015, the big buyers of overseas parts suppliers were state-owned companies. But last year, private Chinese buyers began to emerge.
Like their state-owned peers, private suppliers favor foreign targets with advanced technologies in vehicle safety, powertrain technologies and EV batteries.
For example, a Chinese private equity firm dubbed GSR Capital is near a deal to acquire Nissan's in-house supplier of lithium ion batteries for the Nissan Leaf, Bloomberg has reported.
While Chinese suppliers have been on a buying spree for years, they show no sign of slowing.
That's because these companies, most of which are listed, can count on a well-functioning domestic stock market to raise capital. Despite a messy stock market collapse in 2015, China's stock market has stabilized and the number of companies going public has steadily increased.
Chinese suppliers also have the government's full support for making overseas acquisitions.
In a blueprint it released in April for the development of the domestic auto industry, Beijing pledged to tap government funds and state-owned banks for loans to encourage suppliers to go global.
The government's goal is for several domestic manufacturers to join the ranks of the world's top 10 automotive suppliers by 2025.
This week, Automotive News listed five Chinese companies among the top 100 global automotive suppliers in 2016, up from only two the previous year.
In years to come, you may rest assured that more Chinese companies will make the list.

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