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Competitive Advantage: 3P
  Date:2013.09.28  Hit:295次
Mr. Herman Chang, who is a senior director of Carlyle Group represented at the exclusive interview by our reporter that the private equity fund was far more than pure financial investment. Carlyle will seek the companies with absolute advantages and find the potential company. But we will take more notices of value added for the targeted enterprises.

PE was objected

Herman Chang joined in Carlyle Investment Group in September of 2006. In the before, he had served in Delphi Corporation, which is a supplier of General Motor and automobile components, for twenty years. He had stayed in Asia and China for more than ten years as president of Delphi (China), Pacific-Asia Region and Global Business Cluster etc…

He told the reporter that he once objected the other PE investment companies in the before. “I once think a private equity investment company is engaging financial operation,” he said, “I was a Pacific-Asian president of Delphi. The CFO reported the financial affairs to me. Why the financial operation is prevailing? Therefore, I predicatively refused them.”

Afterwards, cooperated with Mr. Yang Xiangdong, who is a co-head of Carlyle Investment (Asia) Fund, Herman Chang became aware that the concerns and consideration of Carlyle Group is alike with them remarkably. They also help company carrying out statistic intentions, enlarging the market share and creating value for the company.

Herman Chang said: “With practices and experiences in General Motor and Delphi for more than twenty years, I have learned some knowledge as possible as I can. But it is more important that I feel these experiences and skills can not only be applicable for the industry of automobile, but also quickly for the other industrial fields such as glass, steel tube, plastic etc. relying on the platform of Carlyle.”

Herman Chang also said that it is inevitable that more “bottlenecks” such as capital and management etc. will occur during the development of a company. For the “bottleneck” of capital, you may apply for loan from the bank or banks or seek to list. You may also raise capital from PE corporations. He presented that the PE corporations might be one of the options when the enterprise encountered “bottleneck”.

Since he joined in Carlyle Group from last September, Herman Chang has been proud that he assisted the equity participation to Yangzhou Chengde Steel Tube Co., Ltd. He also facilitated that Vought Aircraft Industries, which is a subsidiary of Carlyle, cooperated with AVIC I with a subcontract for tail fin of Boeing 747-800 valued USD300.00 million for CATIC and AVIC I, Chengdu Aircraft Industrial (Group) Co., Ltd.

“Propeller” of Value Vision

“Up to now, some medium only covered the news of the investment and income for PE and privately offered fund,” Herman Chang said, “Actually, the capital injection is the first step of Carlyle’s investment. We will prefer to take more notices of partnership establishment and work out ‘Value Vision’ for our enterprise to propel it’.

“For each project, Carlyle will help the domestic enterprises growing soundly and increase their competitive advantages to enter into the international market, “he said, “Carlyle will disregard those companies which borrow money only. We will suggest that they borrow from the bank or banks directly. We will focus our equity participation on a company which will add value and enlarge market shares to be a first-class enterprise in the world relying on Carlyle’ global networks and forces.”

“For example, with our equity participation, Yangzhou Chengde Steel Tube Co., Ltd has already achieved the scheduled target in a short period. We really care about the value created.”

In March of 2007, Carlyle acquired the 49% equity of Jiangsu Chengde Steel Tube Co., Ltd by USD80 million.” Carlyle will regard the financial factors as the considerations for selection of investment goals, but we will prefer to pay attention to the operation of top management after our equity participation as well as the role play of Carlyle for the value added,” he said, “Our equity ratio of participation may be optional instead of 49%:51% based on more considerations.”

“3P i.e. people, process and philosophy are competitive advantages of a company. For example, Jiangsu Chengde Steel Tube Co., Ltd has unmatched manufacturing technology to solve the main problems of seamless production with high costs and long lead time,” Herman Chang said, “We think the company has its own unique value to be push towards the international market. It meets our “Value Vision”.

“Jiangsu Chengde Steel Tube Co., Ltd founded in 1988 and locates in the east suburban Yangzhou,” Herman Chang said, “We focused on promoting their value based on ‘3P’ after Carlyle’s equity participation. We have employed the COO, CFO and North American sales director. The COO is my colleague in Delphi with several years of experience in Mckinsey. We think he is a qualified candidate of this position. Therefore, I have invited to talk with him for more times. Subsequently, we have employed a CFO from a famous multi-national company by the same way.”

“It is not easy to persuade the top management to serve in Yangzhou. Besides the appeal of Carlyle, we will display a “Value Vision” for them,” he said, “We hope that they may propel the development of Chengde.”

“As a non-public enterprise, Jiangsu Chengde Steel Tube Co., Ltd had a successful operation in the before, however, if we want to achieve the internationalized target, we must rebuild and promote it by means of flows including operating flow, customer management flow, innovation flow, code flow to meet the requirement of corresponding flows in a first-class international company,” Chang said, “Carlyle has hold the several hundreds of enterprises in the world. We may give more optional recommendations to Jiangsu Chengde Steel Tube Co. to rebuild as soon as possible.”

Chang said: “We strengthen that the internationalization of a Chinese company must incorporate with its Chinese cultural background. We only provide them some optional recommendations concerning corporate value, market position and strategy. They will choose the suitable corporate culture to form a “barrier” which the competitor cannot break through.”