On March 17, rumors began circulating that the Shandong State-owned Assets Supervision and Administration Commission (SASAC) had plans to transfer its stake in Shantui to Weichai Power. However, Weichai Power officially denied any such intentions, stating that neither the company nor its controlling shareholder, Weichai Holdings, had engaged in discussions or signed any agreements regarding asset restructuring. The company also emphasized that no such plans would be pursued in the next three months.
Despite these denials, industry insiders remain convinced that Weichai Holdings is likely to push forward with the integration of upstream and downstream industrial chains within the auto parts sector in Shandong Province. Analysts believe that this move aligns with broader state-owned asset consolidation efforts in the region.
Wang Liusheng, a senior analyst at China Merchants Securities, explained that Weichai Holdings’ initiative is in line with the provincial government’s goal of streamlining state-owned enterprises and enhancing operational efficiency. “The integration could lead to better resource allocation and synergistic effects,†he said.
Another analyst, Wang Hexu from Pingan Securities, noted that while the official statements may suggest otherwise, the possibility of future integration remains high—especially in terms of cross-shareholding between Weichai Power and Shantui. He compared the situation to Japanese companies that use similar strategies to form industry consortiums.
A local source in Shandong revealed that if the integration goes beyond a simple transfer of shares, the Shandong SASAC may facilitate the merger of Weichai Holdings with Shangong Group. This would include the transfer of Shantui’s shares, aiming to create a larger, more competitive industrial group.
Both Shangong Group and Weichai Holdings are wholly owned by the Shandong SASAC. In addition to holding shares in Shantui, Shangong Group controls several construction machinery companies, including Shandong Lingong, Shandong Zhongyou, and others.
Liu Rong, chief analyst at China Merchants Securities, suggested that the integration path in Shandong might resemble that of Xiamen, but he pointed out that a mere acquisition of Shantui’s listed shares may not bring substantial benefits. He warned that if Weichai Power gains control, it could shift Shantui’s strategic direction, potentially harming its long-term development.
However, Wang Hexu sees value in the integration. He believes that even without immediate changes, closer collaboration between Weichai Power and Shantui could lead to improved communication and joint development. Additionally, Shantui could benefit from Weichai’s sales channels to expand its market presence.
Wang also highlighted that the integration could serve as a protective measure against potential hostile takeovers of Shantui.
The relationship between Weichai Power and Shantui has been evolving for some time. Last year, Jiang Kui, a former executive of Shantui, moved to Weichai Holding Group. His appointment as Deputy Party Secretary and Deputy General Manager of Weichai Holdings was seen as a sign of deeper strategic alignment between the two companies.
Since 2006, Weichai Power has pursued an ambitious expansion strategy. Under the leadership of Tan Xuguang, the company has focused on both internal innovation and external acquisitions. One notable move was the purchase of French engine manufacturer MOTEURS BAUDOUIN during the financial crisis, marking Weichai’s first overseas acquisition.
With sales reaching 49 billion yuan in 2008, Tan Xuguang set a target of surpassing 100 billion yuan in annual revenue within three years. To achieve this, Weichai has emphasized both technological advancement and strategic expansion through mergers and acquisitions.
Industry experts believe that integration and acquisition are key to Weichai’s growth. Wang Liusheng noted that building a complete industrial chain is central to Weichai’s vision, but this requires support from the Shandong government, which aligns with the province’s broader state-owned asset consolidation strategy.
Shandong SASAC has been clear about its goals: to optimize the state-owned economic structure and concentrate capital into key industries and enterprises. The ongoing integration efforts involving Weichai Holdings fit well within this framework.
Reports indicate that talks between Weichai Holdings, Shandong Automotive Industry Group, and Shangong Group have been underway for over two years. These reorganizations are expected to be included in the "Shandong Provincial Automobile Industry Adjustment and Revitalization Plan."
In early March, Shandong Province announced its support for the planned reorganization of Weichai Power, Shandong Automotive Group, and Shangong Group. The goal is to cultivate eight to ten large enterprise groups with strong competitiveness and annual revenues of up to 200 billion yuan.
If completed, this integration would transform Weichai Power from a power supplier into a full-system component provider, positioning it as a major player in international heavy-duty vehicles, construction machinery, and engines.
According to local sources, three key companies or groups may eventually merge to form a new entity called “China Heavy-duty Group Corporation.†This would enable better coordination across the supply chain and more efficient resource utilization.
Wang Liusheng concluded that once the integration is finalized, it could create a more favorable environment for all parties involved.
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