In the five years since its accession to the WTO, China's auto parts industry has not touched people's attention like every vehicle moves. However, in reality, the parts and components industry is changing as much as the entire vehicle. More than 70% of multinational component giants have gathered in China, and local parts and components companies are seeking ways to grow and expand in the gap. In the next 5 to 10 years, China will not only provide support for domestic auto companies, but will also supply components for global automotive companies. China will likely become the world's automobile parts distribution center.
I. Multinational giants: gradually becoming dominant
With the multinational auto companies coming to China, supporting giants are also taking root in China. Bosch, one of the earliest component giants to enter China, already has 13 branches, 3 R&D centers, 6 joint ventures and 6 sales companies. The products cover many fields such as EFI, ABS, control and transmission systems. .
Delphi, which filed for bankruptcy protection in the United States, has a thriving business in China. It now has 14 parts and components manufacturing plants with a total investment of more than 450 million U.S. dollars and produces more than 40 major categories of products. Since 1994, Delphi has grown rapidly in China at an average annual rate of 24%, and the Chinese market has increasingly become an important growth point for Delphi.
Currently, the world’s third largest supplier of automotive parts and components – Japan’s Denso has 15 joint ventures and wholly-owned enterprises in China, and 120 repair stations for the aftermarket, which will increase to 600 in 2010, with China The cooperative franchise system has also established a franchise network covering the whole country. In 2004, the total sales of Japan Denso in China was 40 billion yen, and it is planned to reach 150 billion yen in 2010.
In addition to these three multinational giants, Visteon, Goodyear, Michelin, Aisin Seiko, George Fischer and others all gathered in China. According to statistics, more than 70% of multinational component giants have set up branches in China, and follow the footsteps of vehicle manufacturers to transfer production bases to China. Taking Suzhou as an example, this city, which benefits from the developed automobile industry in the Yangtze River Delta, is becoming a paradise for foreign auto parts and components, and is also a typical example of a new wave of auto parts in China. At present, there are 300 large-scale production enterprises in Suzhou with more than 2,000 products. Take Suzhou Industrial Park as an example. In recent years, there have been nearly 30 "newly settled" global auto parts companies.
The multinational component giant has become an important component of China's auto parts industry. In recent years, there have been three changes in its investments in China: from equity participation to controlling, from joint ventures to sole proprietorship, and from possessive markets to monopoly markets.
Foreign-funded parts and components companies control the core technology of key parts and components. They have the advantage of supporting the OEM's priority. They continue to enjoy some of China's preferential policies and have stronger competitiveness than other manufacturers. In the parts and components market, especially in the technical content. The higher high-end market has occupied a large share.
Before 2004, the joint venture in the auto parts industry was also constrained by the policies of the previous generation of automobile industry. Foreign investment could not occupy a controlling position in key parts and components companies. Therefore, many parts and components joint ventures maintained a 50:50 shareholding ratio. However, after the introduction of new industrial policies, many foreign companies immediately acted to obtain control of the joint venture company. In addition to joint venture channels, foreign-funded parts and components companies are also adopting a "push-pull" strategy to merge and restructure domestic-funded parts and components companies.
Foreign-funded enterprises gradually occupy the leading position in China's auto parts industry, which has become a trend and has brought considerable challenges to the survival and development of local parts and components companies.
Second, local manufacturers: difficult walking in the cracks
The five years after China’s accession to the WTO was a period of great development of the Chinese auto industry, but the days of local parts and components companies in recent years have not been better. On the one hand, the price of raw materials continues to rise; on the other hand, the entire vehicle price war that began in 2004 has caused many OEMs to shift part of their cost pressures to component manufacturers. In addition, the strong competition of multinational giants has made the survival of many local parts companies difficult. The statistical results in 2005 showed that the parts and components industry has seen its first-ever profit decline in 10 years.
The domestic auto parts companies have low level of self-development ability, it is difficult to break the existing closed interest system of the joint-venture vehicle factory, and the low degree of industrial concentration is the three important factors that limit their development.
High-tech key components are basically controlled by foreign-funded enterprises. The products of domestic-funded parts and components companies are mainly concentrated in low-value areas. The models that they support are also mainly concentrated in low-end commercial vehicles and low-value brand economic passenger vehicles. field. According to statistics from the China Association of Automobile Manufacturers, in 2004, the research and development expenses of more than 750 key auto parts companies accounted for only 1.75% of sales, which was lower than in 2003.
It is difficult to break the existing closed interest system of the joint-venture vehicle manufacturer. This is a headache for many parts manufacturers. If you want to enter the supporting system of a joint-venture vehicle manufacturer, you must first send the component products to the overseas headquarters of a foreign-invested automobile company for certification. However, such certification normally takes 2 to 3 years. Even after passing all the testing procedures, the market cycle for the relevant models has ended, and because the parts that need to be certified are often dedicated parts for specific models, the parts are basically obsolete after certification ends. Foreign-funded parts manufacturers have begun to synchronize certification as early as the time the vehicle manufacturer developed a model, in other words, it is not at the same starting line for domestic parts manufacturers.
In addition, the decentralized development of local parts and components companies and the fragmentation of their products are very serious, which greatly limits the formation and release of the scale effect of China's auto parts industry. It is understood that there are more than 2,000 fixed-point parts manufacturing companies in China, and actually more than 5,000 manufacturers are engaged in the production of auto parts. Most of these factories are very small, of which more than 80% have sales of less than 100 million yuan, while only 130 companies have annual operating income of more than 100 million yuan, and 2,700 have annual income of less than 500,000 yuan. Since there is no scale, the production cost will be too high, and the benefits of the parts and components companies will naturally not go.
Third, component exports: there are hidden dangers in Shengjing
In recent years, the export of parts and components in China has been in rapid development year after year, becoming a major component of China's auto industry exports.
According to statistics, in the relatively downturn of the Chinese auto industry in 2004, auto parts exports still accounted for 45% of the total auto industry exports, and if they included engines and auto tires, they accounted for 62% of total exports. From January to November 2005, the cumulative exports of auto parts, accessories and car bodies totaled US$7.706 billion, an increase of 53.43% year-on-year.
China's auto parts exports have already reached a considerable scale, but few of them have been able to create independent brands that directly support foreign companies. Most of the companies use "decked production", that is, their own production of spare parts, give it to the supporting business, and then affix the trademark of the supporting business to the complete vehicle factory.
At present, the export of China's auto parts enterprises will also face the following problems: mainly low-value-added products, mainly raw material consumption, mainly after-sales service market, and individual-based search for orders. The export prices are tilting each other, resulting in a rapid increase in export volume, but the benefit growth is not obvious. To change this kind of export pattern depends on the improvement of the overall strength of China's spare parts.
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