On May 4, Foton Motor and Weichai began a new round of strategic cooperation. Prior to this, on April 8th, Fukuda's ISG engine cooperating with Cummins was also listed in the United States. At the same time, Foton and Daimler's joint venture engine plant will also begin construction this year.
Why does Fukuda cooperate with three engine manufacturers at the same time? What can these cooperation bring to Futian, Weichai, Cummins, and Daimler? In the future, what kind of matching pattern will be formed among these three cooperative engines in Futian Auman's products? The author here makes some analysis based on Coase's new institutional economic principles.
Kos and New Institutional Economics <br> <br> • Harry • Ronald Coase (RonaldH.Coase) - originator of the new institutional economics, winner of the 1991 Nobel Prize in economics. Coase's two representative works are "the nature of the enterprise" and "social cost issues."
The theoretical system created by Coase and his followers is now often referred to as "new institutional economics." The content of the new institutional economics can be summed up in two words: "property rights" and "transaction costs." Broadly speaking, property rights are the interests protected by the system. It is different from the ownership of material production materials in traditional socialist economics. Property rights include both physical assets and human assets, including both tangible assets and intangible assets (such as intellectual assets and goodwill assets); transaction costs, One of the more popular words is the cost of dealing with people.
People's economic interests must be obtained not only from dealing with nature, but also through human-to-human cooperation. Human-to-human cooperation will result in the distribution of benefits. Only by solving this problem will cooperation be achieved. The specific way of emancipating the issue is to negotiate a contract, but negotiation and contracting are costs, and the form of the contract is also varied. Achieving different forms of contract will consume different amounts of transaction costs, and will also have different cooperation effects. The transaction costs and effects will be different.
60 million units equipped with Weichai engine Auman heavy truck off the assembly line <br> <br> So, what kind of contract in the form of good? Coase's answer is that when the effect of cooperation is the same, a contract with a lower transaction cost should be adopted. This is the conclusion drawn from his famous paper "The Nature of the Firm." Coase's theory explains the significance of the existence of a company, and also explains why companies need to carry out joint ventures and cooperation. The existence of companies and joint ventures and cooperation are to reduce transaction costs.
The joint venture and cooperation between Foton Motors, Weichai Power, Cummins, and Daimler should both reduce the transaction costs between them. It is cooperation that reduces transaction costs, and therefore, the respective resources are more effectively configured.
It is well known in the industry that the joint venture between Fukuda and Daimler lasted for eight years. The resulting joint-venture contract defines almost all property rights relations involving both parties. Although there is a lot of cost involved in negotiating this contract, once this contract is in place, the transaction costs within the company after Fukuda Daimler will be very low or zero.
Let’s look at the cooperation between Foton Motor and Weichai Power. According to Foton Automobile News spokesman Zhao Jingguang, Weichai Power is the largest supplier of Foton Motors, and its heavy trucks, light trucks, light passengers and construction machinery and other products are equipped with Weichai engines. Therefore, after the strategic cooperation between Futian and Weichai, it is possible to save a large amount of transaction costs for each purchase in the future with one transaction and contract, thus achieving the optimal allocation of resources.
In fact, the strategic cooperation between Foton Motor and Weichai is not starting from now. As early as 2006, Futian Weichai and AVL and other four parties signed a strategic cooperation agreement. This time, the strategic cooperation between Foton Motors and Weichai Power is a new, deeper and more extensive cooperation with a wider scope and deeper depth, involving various aspects such as capital and technology. It can be said that the signing of some agreements on rights and obligations can also greatly reduce the transaction costs of the two companies in future transactions.
Fukuda and Weichai, Cummins and Daimler's cooperation with the similarities and differences <br> <br> Foton Weifang Diesel, Cummins and Daimler joint venture involves a different way.
For example, Foton Motors and Daimler Automotive are building a joint venture plant for the entire vehicle, which also includes the engine, which is a joint venture between similar companies. Futian and Cummins are joint venture factories to establish engines, and they belong to the upstream and downstream joint ventures in the industrial chain. Futian Automobile and Weichai Power are both peers and competitors (having heavy trucks and construction machinery, and Weichai will also have light trucks. ) Cooperation is also the cooperation of upstream and downstream relations.
The joint venture and cooperation between Foton and Daimler has both technology and management cooperation. Both parties will also pay the parent company for intellectual property rights, as agreed in the joint venture contract. It can be said that in the operation of Foton Daimler, everything was implemented in accordance with the contract, eliminating the need for negotiations and other transactions, thereby greatly saving transaction costs during operations.
Fukuda's introduction of the Daimler OM457 engine should be an initial purchase fee and a fee paid by the platform. As OM457 has already been produced and equipped in Germany, its R&D expenses have already been amortized. Therefore, it can be foreseen that the parent companies of the joint ventures do not have extremely urgent hopes for the sales of OM457. In addition, the joint venture contract places more emphasis on the return on assets rather than the sales of complete vehicles and engines. On the one hand, no matter what engine is fitted, as long as the money is made, it will satisfy the demands of both Futian and Daimler. From this point of view, OM457 does not necessarily have to achieve what kind of sales.
The cooperation between Futian and Cummins is a purely upstream and downstream relationship in the industrial chain. Cummins ISG, which is a joint venture, is a product that has not yet been put into production. This product is expected to have a sales volume of 30,000 units in China and 30,000 units in other overseas factories. Therefore, whether for Fukuda or Cummins, the Cummins ISG's sales in China are all goals that need to be achieved. Otherwise, the amortization of its R&D expenses could not be completed, and the input from Foton and Cummins could not be fully recovered in the earlier period.
Let’s look at the cooperation between Foton Motors and Weichai Power. Compared with the first two joint ventures, this cooperation does not form a joint venture company, but the two parties have mutual equity, and therefore, it should also be counted as cooperation at the capital level. For Futian, Weichai Power is its largest supplier of parts and components. Moreover, Futian Auman's main engines for the mainstream products are non-welcomes. Therefore, the strategic cooperation between Foton Motor and Weichai, the establishment of a good cooperative relationship, and win-win cooperation in product development, sharing of resources, will help reduce transaction costs, help reduce Weichai's R&D costs, and will also help improve Fukuda's product quality. However, because this kind of cooperation is not a cooperation of the joint venture company, and besides the supply of Weichai's products, Weichai itself has the heavy truck company Shaanxi Auto, and many other vehicle companies will also match the engine of Weichai. Therefore, Futian can Weichai’s cooperation in engine research and development is supported, but direct investment is not realistic.
The supporting pattern of the future of the three cooperative engines <br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br>
The Daimler OM457 engine to be introduced by Foton was developed by Daimler in Germany. It was originally installed on a Mercedes-Benz truck in Germany and it was doomed to be expensive. According to the law of supply and demand, the more expensive the price, the less the sales volume. Therefore, in the future, the OM457 joint venture production of Foton Daimler will certainly be at the top of the engine market demand pyramid, and there will not be much sales. There is the aforementioned, the research and development costs of this engine have been largely amortized, so there is also a huge sales pressure.
The Futian Cummins ISG is a brand new R&D engine. More than half of its sales are to be realized in China, and sales in China are mainly to be completed by Auman. Therefore, there must be a lot of pressure on this engine. However, this engine is a new research and development, advanced technology, and huge investment, so the price will be more expensive than the mainstream Weichai engine. Due to the high price elasticity of mainstream heavy trucks, the heavy trucks that Futian Cummins can install should be the central part of the user demand pyramid. Its upper limit is also its production capacity - 30,000 units.
Weichai WP12HPDI480E50 <br> <br> and Weichai engine equipped with Auman trucks, must be the bottom of the pyramid of needs, a huge number. It is also because Weichai has occupied the mainstream position in the entire product mix of Auman. Therefore, the strategic cooperation between Futian and Weichai is very necessary. On the other hand, Futian's other car varieties are also equipped with Weichai Power, but none of Auman's is huge and has a huge influence on competing products. Therefore, the strategic cooperation between Foton Motor and Weichai Power was selected at the Auman II Plant. At the same time, the 600,000 Auman off-line ceremony for loading Weichai Power was also held. It is not difficult to understand.
Through the above analysis we can see that Futian Auman's future supporting structure will continue to be Weichai as the main supplier, Futian Cummins as the secondary supplier, and Mercedes-Benz OM457 as a supplement. If there must be a ratio, then in the future, in the fitting of the Foton Auman heavy truck, the matching ratio of these three kinds of cooperative engines is 7:2:1.
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