Why doesn't Wanxiang Group choose the extension of its main business when implementing the diversification strategy?

Wanxiang American Company, which went to the United States to do transnational business as early as 1994, is quite famous among China enterprises in the United States-it is the largest China enterprise in the midwest of the United States, with sales revenue exceeding $60 million in 2000. "But we found that with the development of information technology, just being a distribution company that simply sells auto parts will not add added value to the company, and its profits will decrease year by year." Ni Pin said. Realizing this, Wanxiang searched everywhere, hoping to find a promising main business, expand the market in the United States and consolidate its position. Wanxiang Group thought of two directions at that time. One was to engage in manufacturing research and development in the United States, and the international main engine factory kept up with the development of international advanced technology. The second direction is to use the superior resources of American high-tech or financial industry, introduce such resources into the domestic market, and use Wanxiang American company's domestic and foreign market experience accumulation, social network and financial strength to find new growth potential projects for Wanxiang Group.

At this time, we recommend Horton to the law firm of the American company, because Horton is also a client of the law firm. After about four months of negotiations, the two sides signed an agreement to set up a joint venture brokerage company on April 14, 2004. "The whole negotiation process was very pleasant," said Ni Pin. "The most important thing is that our two sides can be culturally integrated. Unlike some big American companies, Horton can't make quick decisions every day. The company's method is more dynamic. Horton also has an open team. In addition to Glenn MHorton, founder and president of Horton Insurance Group, other directors are from former chairman of Chicago Federal Housing Credit Bank, executive vice president of Amerisure Insurance Company, former president of Paloma Insurance Company and former director of RJL· Pinwater Investment Company. Moreover, this company is not exclusive and can recognize the potential value of the insurance market in China. " Most importantly, Horton is a company with high growth strength and potential. In the long run, this company will not have big business risks. Horton Insurance Group is the second largest unlisted insurance brokerage company in Chicago and one of the largest insurance brokerage companies in the United States. The company directly represents many first-class insurance companies in the United States, including Citigroup's traveler insurance companies ChubbCNA and StPaUl. The company earns about $30 million in commission from about $300 million in insurance premiums every year, with an average annual increase of 25 in the past five years, which is much higher than the average level of the same industry. It is also the fastest growing insurance brokerage company in the United States.

Lu, Chairman of Wanxiang Group's Board of Directors, admitted in an interview that the financial and insurance industry, as an emerging industry with broad market prospects, has been in Wanxiang's expanding vision. In the past, due to industrial policies, enterprises lacked corresponding industrial operation experience, and there has been no substantial progress. However, Wanxiang's market research and empirical analysis in this field never stopped, and made corresponding preparations for it. The decision of Wanxiang American Company to invest in the largest unlisted insurance company in the United States is another beneficial attempt of Wanxiang Group's industrial expansion.