Summary of Key Points
Several less prominent counties in Anhui (Shouxian, Fengyang, Feixi) have recently made aggressive acquisitions or investments in listed companies. The purpose is not to “buy shells for cashing out” but to precisely fill gaps in their local industrial chains. Taking advantage of the withdrawal of provincial state-owned assets, these counties have used flexible strategies (such as holding a small percentage of shares, acquiring in stages, and using fund structures) to secure leading companies in their industries. Behind this are Anhui’s policy support, the urgent need for county economic transformation, and a strategic approach of addressing specific industrial shortcomings.
Detailed Explanation
1. How can counties seize these opportunities?
The withdrawal of provincial state-owned assets has created such opportunities. Jiangxi’s state-owned assets originally planned to invest 2.5 billion yuan in Lianchuang Electronics but decided against it for several reasons: firstly, Lianchuang’s core production capacity is located in Hefei, Anhui, making it difficult for Jiangxi to exert effective control; secondly, the stock price dropped from 12.7 yuan to 7.2 yuan, resulting in a loss if the plan had been pursued; thirdly, Jiangxi’s previous acquisition of a fraudulent company led to significant losses, increasing their caution.
In contrast, county-level state-owned assets have a shorter decision-making process (no need for multiple approvals) and a more urgent industrial demand (the absence of a certain component can halt the entire chain). For example, Shouxian seized the opportunity within just 7 days of Jiangxi’s withdrawal, investing 630 million yuan to acquire the company.
2. The goal is not just to buy a shell; it’s to fill a specific gap in the industrial chain
Each county’s acquisition targets a specific gap in its local industrial chain:
- Shouxian: Hefei’s urban area is developing new energy vehicles, and while they have the chassis and batteries, they need automotive optical lenses. Lianchuang Electronics, a supplier for companies like BYD and Tesla with production facilities in Hefei, fills this gap.
- Fengyang: Known as the “quartz capital” of China, it produces 25% of the country’s photovoltaic glass but lacks magnetic components for inverters. Glier’s magnetic components are essential for photovoltaic inverters, so acquiring this company completes the industrial chain.
- Feixi: They first invested in Jinli Co., Ltd., a lithium battery separator company, and then facilitated its acquisition by the listed company Fosu Technology, thus strengthening their local new energy industry and realizing the securitization of state-owned assets (converting equity into shares of a listed company).
In essence, the strategy is to buy listed companies that address local industrial needs.
3. Anhui’s policies provide support for these acquisitions
By the end of 2024, Anhui became the first province to introduce provincial-level policies supporting mergers and acquisitions, including specific guidelines encouraging state-owned assets to integrate industries through the capital market. The effects were immediate: in 2025, the number of mergers and acquisitions in Anhui increased by 70%, and the amount involved more than doubled.
These policies give counties the confidence to proceed, offering support such as simplified approval processes and financial subsidies.
4. How do counties afford these acquisitions?
Despite limited funds, they have adopted clever strategies:
- Low percentage of shares: Shouxian only acquired 7.27% of Lianchuang Electronics’ shares to gain control, as the original shareholders held a dispersed stake.
- Staged acquisitions: Fengyang first obtained some shares and voting rights to gain control, then bought the remaining shares after the restricted period ended, avoiding the need for a one-time payment.
- Fund structures: Feixi used funds to invest in a non-listed company before facilitating its acquisition, reducing risks and enabling a smooth exit.
5. Challenges ahead: Can counties manage these listed companies effectively?
While acquiring companies is easy, managing them successfully is more challenging:
- Goverance issues: Can a small percentage of shares truly control a company, especially if the original management does not cooperate?
- Talent shortage: Do counties have the expertise to manage and operate listed companies?
- Performance pressure: Shouxian set performance targets for Lianchuang (revenue of 3.1 billion yuan by 2026); what if they fail to meet them?
These are challenges that counties must overcome. Acquiring a company is just the first step; truly integrating it into the local economy is the real challenge.
Conclusion
The acquisitions by Anhui’s counties are not random; they represent a new approach to “precisionally filling industrial gaps.” If management and talent issues can be resolved, this could become a viable path for county economic transformation. However, there is still a long way to go, and progress must be made gradually.