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Brilliance Jinbei teamed up with Chery for shallow cooperation or capital integration?
The mid-level Chinese car brands, Brilliance Jinbei and Chery, are two of the most prominent domestic automakers with independent intellectual property rights. Although both currently rely on engines from Mitsubishi, their future paths may become more intertwined. This possibility stems from a recent collaboration between the two companies, raising questions about whether this partnership could eventually lead to deeper integration.
Recently, Brilliance Jinbei and Chery announced the establishment of Shanghai Kewei Auto Parts Co., Ltd., with each company contributing 5 million yuan to form a joint venture. The company was officially registered in Shanghai in May this year, with a total registered capital of 10 million yuan. Both parties claimed that the goal of this joint venture is to integrate resources in parts procurement, aiming to reduce costs through shared platforms.
However, industry analysts remain skeptical about the practicality of this model. Both companies have their own independent purchasing departments, and it’s unlikely they will quickly consolidate these operations. Moreover, Chery focuses solely on passenger cars, while Brilliance Jinbei also produces commercial vehicles and buses. Their different product lines mean that joint procurement can only cover a limited range of common components, making large-scale cost reductions through this platform unrealistic.
When asked about the real purpose of the cooperation, Chery’s Sales General Manager Jin Yibo remained vague, saying, “The early stage of cooperation has been successful, and further exploration at other levels is ongoing.†A representative from Brilliance Jinbei added, “Cooperation at any level is possible, but this joint venture is just an initial attempt.â€
Despite the cautious public statements, many industry observers believe there may be more to this partnership than meets the eye. Some speculate that Chery, which is preparing for its IPO, may be looking to leverage Brilliance Jinbei’s experience in capital operations. Others suggest that the two companies might be moving toward a strategic alliance similar to Renault-Nissan, with potential capital integration and mutual ownership.
Both Brilliance Jinbei and Chery are state-owned enterprises under local government control, and they both represent China’s national automotive brands. Recent national policies also encourage mergers and acquisitions among domestic auto companies, suggesting that this collaboration could be part of a broader trend.
Interestingly, many executives and board members of both companies have backgrounds in FAW, adding another layer of connection between them. As the automotive industry continues to evolve, the long-term impact of this partnership remains to be seen. (Reporter: Xiong Chengming)