In a move intended to provide access to automobile maintenance providers, Yips Chemical Holdings announced Tuesday that it bought a minority stake in Damai, a start-up Chinese developer of maintenance shops.
Yips, which is based in Hong Kong, said it paid 21.5 million (U.S. $3.1 million) for a 27.8 percent of Damais stock. Damai was formed last year and currently has 30 maintenance shops, but it has set a goal of opening 1,000 in three years.
Strategic investment initiatives such as setting up a car maintenance chain will support transformation of the asset-based business of [Yips] into service and end-user oriented operations, thereby building new growth platforms for [Yips] business, Co-CEOs Stephen Yip and Nat Wong said in a statement.
According to market research findings, in 2017 China had 230 million cars, and the automobile aftermarket was valued at more than 1.3 trillion, they added. In the future, our existing lubricant business will serve as a key engine to drive development of our automobile aftermarket business.
Yips supplies automotive lubricants under the Hercules brand, along with chemicals such as acetate solvents.
Some lubricant suppliers and analysts in China have complained that the nations auto maintenance industry is excessively fragmented and that this makes it challenging to supply lubes through that sales channel.