The Growing Popularity Of RFID Technology Among Chinese Auto Industry Companies
The Financial Times reports that Russia’s top financial institution, United Financial Group (UFC), has acquired a 50% stake in a joint venture with a Russian high-end sports car insurer. The Financial Times refers to this as a Russian alternative to Bentleys and Mercedes Benz. The Financial Times also refers to the insurance giant’s new acquisition as a “breakthrough” in the world of high end sports cars. The Financial Times refers to the investment as a vehicle for both entities “to explore” how they might work together.
The Financial Times describes United Financial Group as a “Moscow-based private equity group with a focus on the Russian market”. The company’s health budgetary results, low debt service and solid cash position led the company to change its investment outlook, the company said. The region of Ufa, which includes the cities of Yarosloy, Nizhny Novgorod, Moscow, and Rostov-on-don, is about 1200 miles from Moscow. This puts Russian drivers in close proximity to some of the most famous sports car events in the world, including the Monaco Grand Prix. The new investment will also provide opportunities for both companies to “diverge further into the field of high-end automobile technology,” according to a release from the investment firm.
The Financial Times article refers to the partnership as a first, but it is not the first time that an international high end auto insurer has formed a partnership with a Russian private equity firm. In fact, according to the article, this partnership has been around for over 20 years. In the mid-1990s, another insurance giant, Insurance Agencies of America (IAA) formed a partnership with Gazda, which is owned by the state. Both companies later merged to form UFA.
The reason that UFA is seeking to expand into this area of high end car insurers has a lot to do with the demand for sporty, luxury cars in the region, according to an analysis of the Russian economy by the World Bank. In particular, UFA says that the automotive sector, which includes performance cars, SUV’s, and mid-size sedans, are a strong market for foreign investment. “The automotive sector in Russia has the potential to double its size in the next five years,” according to UFA. However, a slowdown in the US and European economies may deter many domestic car manufacturers from making a move into the highly lucrative Russian automobile market, analysts say. “There is also a limit to how far a country can expand its dependence on imported vehicles,” admits Alexey Kuznetich, CEO of Semyo-ivo, a Russian automobile producer.
There are already many Chinese sports car producers making their way into the country, but adding another major manufacturer from outside could significantly broaden the range of vehicle options. Many expect that, in addition to buying up brand new high end cars, Chinese sports car makers will also be looking to import vehicles from other countries, particularly those in Europe and Asia. “If you think about it, if there is a European sports car that you would like to have, why not take it to the next level? Take it to another country and sell it. That is exactly what our Chinese partners are doing right now,” says Alex Mandossian, CEO of Mandossian Auctions, an online auction site based in Los Angeles, California.
For investors who want to get in on the action before the trend picks up, there are a few things that you can do to increase your exposure and participation. In particular, consider putting your money into an RFID credit card reader, according to UFA. This device, which records and transmits data on the usage of an RFID card, has been shown to increase efficiency and profits by nearly 25 percent in the manufacturing and distribution of goods and services. According to the United States Federal Reserve, more than two million Americans have now installed their own RFID readers in their offices and businesses. As the global economy continues to grow and become more integrated, there is no doubt that RFID technology will play a major role in the future.