What is the reason for Adient's withdrawal from Yanfeng?

[VonClayton]

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.

[DallasLee]

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.

[DeJonathan]

My friend works at a supply chain company, and they've discussed this topic internally. In the end, it all comes down to a misalignment of needs between the two parties. When Adient first entered the joint venture, they brought technology in exchange for market access. However, Yanfeng learned too quickly and mastered core technologies like seat frames and recliners within just a few years. Yanfeng wanted to develop complete seat systems on its own, but Adient was unwilling to share its core electronic control technologies, making the collaboration increasingly awkward. Additionally, domestic new energy vehicle manufacturers particularly prefer to work directly with local leaders like Yanfeng, leaving Adient as more of a hindrance in the middle. After weighing the options, both sides decided it would be better to part ways and pursue their own paths.

[DiElizabeth]

Just look at the financial reports. Adient's profit margins in the Asia-Pacific region kept dropping during those two years. While Yanfeng had large sales volumes, its profit margins for complete seats were thin, and it had to continuously invest in R&D for new technologies like smart seats. Foreign companies have high requirements for returns and felt it was better to focus on the high-end markets in Europe and America. On the other hand, Yanfeng, backed by SAIC, never had to worry about orders, so naturally, it wanted to take back control and play its own game. When both sides did the math, a breakup seemed the easiest solution. This kind of joint venture breakup drama is as common as daily meals in the auto industry.

[DiJoseph]

In my opinion, it was a breakdown in technical roadmap negotiations. Nowadays, high-end seats are all about electrification and intelligence. Yanfeng wanted to integrate cockpit electronic systems, while Adient clung tightly to its smart adjustment patents. The two sides bickered daily at their Chongqing R&D center, with project progress crawling at a snail's pace. Then came the 2020 pandemic—Adient suffered massive global losses and desperately needed cash to survive, so Yanfeng seized the opportunity to buy back the shares at what I heard was a pretty favorable price. Now Yanfeng's independently developed seats are everywhere in Li Auto and BYD vehicles, carving out an even bigger market for themselves.

[Lucas]

Simply put, the honeymoon period is over. During the first seven years of the joint venture, Adient provided the technology while Yanfeng managed production, and the collaboration was quite harmonious. Later, with the explosive growth of domestic new energy vehicles, seat development had to be integrated with screens and air conditioning systems, compressing the development cycle to 12 months. The foreign company's decision-making processes simply couldn't keep up with the pace, so Yanfeng directly partnered with local chip manufacturers for faster results. As Adient saw its influence diminishing, it completely divested its remaining 30% stake by the end of last year. The two companies still collaborate on supply, but the relationship has shifted to a purely transactional one, which ironically works more efficiently now.