Hong Kong-based Yip’s Chemical Holdings Limited has acquired a minority interest (27.8%) in Chinese car maintenance chain Damai for CNY21.52 million (USD3.1 million). Currently, Damai has 30 shops across China, which is expected to grow to 1,000 shops within three years.
Yip’s Chemical’s investment in Damai allows the company’s lubricants business to tap into China’s do-it-for-me market, where its lubricants products can be offered to customers as the preferred brand.
“Strategic investment initiatives such as setting up a car maintenance chain will support the transformation of the asset-based business of the Group into service and end-user oriented operations, thereby build new growth platforms for the Group’s business. According to market research findings, in 2017, China had 230 million cars and the automotive aftermarket was valued at more than CNY1.30 trillion (USD189.7 billion). Yip’s Chemical’s automotive lubricant brand ‘Hercules’ has a close to 26-year history supported by a nationwide distribution network. In the future, our existing lubricant business will serve as a key engine to drive the development of our automotive aftermarket business,” said Stephen Yip and Nat Wong, co-CEOs of Yip’s Chemical.
The company said that it “will keep optimising the quality of its principal businesses and, at the same time, carefully explore M&A projects to create new business growth drivers. This latest cooperation with Damai is a pursuit embracing this development direction.”
Since Damai was established in 2017, its nationwide car maintenance business model has captured industry attention. From human resources management, operating systems, logistics as well as service scope, Damai has upheld its standardised operation for price and quality assurance. At the same time, insisting on using only synthetic oils, it has created the service standard for the installed automotive aftermarket. Damai said 300 of the 1,000 outlets it plans to open in the next three years will be located in the southern province of Guangdong. Damai will also focus on the following areas: Jiangmen, Zhongshan, Foshan, Zhuhai and Huizhou.
Through this strategic investment, and applying its capital, brand, management, logistics and service advantages, Yip’s Chemical will be able to help promote the development and consolidation of the industry and address the issue of excess capacity at the low-end of the automotive aftermarket, the company said.