BEIJING -- Alcohol and cars are two things least expected to go hand in hand, but a well-known Chinese liquor-maker in Sichuan province has decided to have a sip anyway by becoming a shareholder of a carmaker.
Push Group, a subsidiary of Wuliangye Group Co in Sichuan, has acquired a 0.5 percent stake in Cowin Auto, according to the carmaker's registry records.
A low-end brand of Chery Automobile, Cowin was established in 2014 and sold just 43,000 cars in 2016, according to the China Passenger Car Association.
The acquisition was part of a deal package in which Chery sold a 51 percent stake for 2.49 billion yuan ($380 million), according to a Chery statement issued last week. The absolute majority - a 50.5 percent stake - will go to a government-owned automotive investment company in the same city as Wuliangye.
Despite the move, Wuliangye said it will remain focused on its liquor-making, according to the Securities Daily newspaper.
"If we really want to do it big in the car manufacturing business, we will not hold a mere 0.5 percent," Securities Daily quoted a source in the company as saying.
Wuliangye made public its intention to make inroads into the car business as early as 2003. In 2006, it acquired a 50 percent stake in an engine-maker under Brilliance Auto Group, but sold its shares back to Brilliance in 2011.
Wuliangye is estimated to have achieved operating revenue of 80 billion yuan in 2017, with its net profit reaching 14 billion yuan in the year, Chairman Li Shuguang told reporters in December.
Besides selling part of its Cowin equity, Chery has also introduced a new shareholder for Qoros Automotive, its joint venture with Quantum Fund.
Chery sold a 25 percent stake in Qoros to Baoneng Group for 1.63 billion yuan, according to a notice at the Changjiang Equity Exchange in December.
A property and financial services conglomerate controlled by Chinese billionaire Yao Zhenhua, Baoneng became a household name after a failed bid to buy a major stake in China's largest real estate developer, Vanke.
Established in 2007, Qoros was Chery's bid to go up in the Chinese car market, but its performance has been unsatisfactory. The joint venture sold only 12,545 cars in the first 10 months of 2017, a 31.8 percent fall year-on-year. In the same period, China's passenger car sales grew to 22.92 million vehicles, the highest in the world.
According to the Changjiang Equity Exchange, Qoros lost 1.33 billion yuan in 2016, which pushed the floundering carmaker's total debt to 9.63 billion yuan. Baoneng has long shown great interest in carmaking, and its acquisition of Qoros' equity will at least help it to obtain a carmaking license, analysts said.
The conglomerate signed an agreement with local authorities in Kunming, Yunnan province, in November, where it plans to build a plant for new energy cars and components, according to local newspaper Kunming Daily.
It signed a 14 billion yuan investment agreement in October with a district government in Hangzhou, Zhejiang province, to launch a new energy vehicle development and production project.
Baoneng has already registered an automotive company under its name. Its business includes specializing in the development, manufacturing and sales of engines, chassis, buses, passenger cars and new energy cars. (Source: China Daily)
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