What is the reason for Adient's withdrawal from Yanfeng?
2 Answers
Adient withdrew from Yanfeng due to strategic adjustments. Adient's business scope: To make investments in accordance with the law in the fields of automotive parts, aircraft parts, train parts, and other areas where foreign investment is permitted by the state; to assist or act as an agent for its invested enterprises in purchasing machinery, office equipment, raw materials, components, and parts required for production from domestic and international markets, and to sell the products manufactured by its invested enterprises domestically and internationally, while providing after-sales services; to balance foreign exchange among its invested enterprises with the consent and supervision of the foreign exchange management authorities; to provide technical support, employee training, and internal human resources management services for its invested enterprises during product production, sales, and market development; to assist its invested enterprises in seeking loans and providing guarantees; to establish research and development centers or departments in China to engage in the research and development of new products and high-tech, transfer its R&D achievements, and provide corresponding technical services; to provide consulting services for its investors and market information, investment policies, and other consulting services related to investments for its affiliated companies; to undertake service outsourcing business for its parent company and affiliated companies; to engage in the wholesale, import and export, and commission agency (excluding auction) of automotive parts and accessories, interior parts, aircraft parts, and train parts, and to provide related supporting services. Introduction to Yanfeng: As an independent automotive parts supplier, Yanfeng has established factories in major automotive manufacturer clusters across the country to provide customers with zero-distance just-in-time supply and services. At the same time, the company has also entered the global procurement systems of many multinational automotive enterprises, providing international customers with products and services that exceed expectations.
I've thought about this for a while. The reason Adient sold its shares in Yanfeng ultimately came down to market strategy adjustments. Back then, competition in the automotive seat industry was intensifying, while Yanfeng was developing exceptionally fast, having established its own R&D and production capabilities. Adient's technological advantages gradually diminished. Moreover, Chinese automakers have been placing great emphasis on supply chain independence in recent years, making it easier for local company Yanfeng to secure orders. Adient probably figured holding shares wasn't as practical as cashing out, especially during their global business contraction phase, so they withdrew funds to invest in more profitable projects elsewhere. This kind of foreign capital withdrawal is quite common in the auto parts industry.
