In the automobile industry pyramid, the vehicle manufacturer at the spire is attracting people's attention, while the parts and components companies in the middle and base are often not noticed, but in fact, the parts industry is changing as much as the entire vehicle. The most fundamental aspect of the brand building of China's auto industry is to establish component industry innovations that can support the development of the entire industry.
“Auto parts and components will be a very important industry in the process of independent innovation and brand building during the “Eleventh Five-Year Plan†period in China.†At the press conference of the 2006 China Auto Parts Suppliers Conference held on February 16th, the Chinese auto industry Jiang Lei, executive vice president and secretary-general of the association, pointed out that “the “Eleventh Five-Year†period, China's auto industry faces two major problems. First, how to deal with the five major trends of industrial transfer to become an international manufacturing center, on the other hand, the Chinese automobile industry brand building The most fundamental thing is to establish a component industry innovation that can support the development of the entire industry."
Automobile is a large industry with a long industrial chain. In this industry pyramid, the vehicle manufacturer at the top of the tower attracts people's attention, while the parts and components companies in the central and base parts are often not noticed, but in fact, the parts industry is changing as much as the whole vehicle. At present, more than 70% of multinational component giants have gathered in China, and local parts and components companies have to seek ways to grow and expand in the cracks.
Seventy percent of multinational giants gather in China
In late April 2004, Bosch, the world’s first Boss, who had entered China, held an unveiling ceremony at its technology center in Suzhou. With a total investment of 60 million euros, it will provide component testing and system testing services for its operations in China. It is reported that Bosch now has 13 branches, 3 R & D centers, 6 joint ventures and 6 sales companies, products related to EFI, ABS, control and transmission systems and other fields.
Almost at the same time as Bosch, Delphi, the world's second-largest component company, also announced that its new plant in Suzhou has been officially put into production. Despite last year's filing for bankruptcy protection in the United States, Delphi’s business in China has been growing. It now has 14 parts 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%.
The world’s third largest automotive parts supplier, Denso Japan, has currently reached 15 joint ventures or wholly-owned manufacturing companies in China, and 120 repair stations for the aftermarket, which will increase to 600 in 2010, and cooperate with China United Auto Parts. The franchise system has also established a franchise network covering the whole country. In 2004, the total sales of 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 to follow the footsteps of vehicle manufacturers to transfer production bases to China.
As of 2005, more than 70% of the world's top 100 parts suppliers have started business in China. There are nearly 1200 wholly foreign-owned and joint venture companies that manufacture automobile parts in China. As a typical example of a new wave of auto parts in China, there are currently 300 large-scale production companies in Suzhou with more than 2,000 products.
Prior to 2004, auto parts joint ventures were also subject to the automobile industry policy, and foreign companies could not take 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 parts and components companies control the core technologies of key components. They have the advantage of supporting the OEM's priority and continue to enjoy some of China's preferential policies. They have occupied a great deal in the parts and components market, especially in the high-tech market with high technological content. Share. The financial and technological advantages of giants are far from comparable to those of Chinese companies, and they have also used China's low-cost advantages. All this has caused the pressure on domestic spare parts companies to increase dramatically.
First-year profit decline in 10 years
Statistics show that in 2005, the domestic parts and components industry saw its first-ever decline in profits for 10 years.
In addition to the strong competition of multinational giants, it is also difficult for local parts companies to survive because of the rising raw material prices. Just started in 2006, the international steel, pig iron and other raw material prices will continue to soar, the international steel average rose by 20% to 30%. As a major consumer of steel and pig iron, parts and components companies must be deeply affected. Some experts have analyzed that the huge cost pressures from international automobile manufacturers and parts suppliers will inevitably erode the domestic parts and components companies.
Upstream raw material prices, parts and components companies may be able to solve the cost control means. However, in the face of the lower prices of downstream hosts and OEMs, domestic parts and components companies are simply crying.
RDA, the secretary-general of the National Association of Passenger Vehicles, revealed that profits from the automotive industry in 2005 were 60% of that in 2004, and the profit rate had fallen by nearly half. In order to ensure their own profit margins, the main engine manufacturers and automakers have to kill the players and lower the prices of upstream parts and components companies.
Experts pointed out that the domestic auto parts companies have low levels of self-developed capabilities, and it is difficult to break the existing closed interest system of the joint-venture vehicle manufacturers. The low industrial concentration is the three major 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 the statistics of China Association of Automobile Manufacturers, in 2004, the research and development expenses of more than 750 key auto parts enterprises accounted for only 1.75% of sales, which was lower than that in 2003.
It is difficult to break the existing closed interest system of the joint-venture vehicle factory, which is a headache for many parts manufacturers. For example, to enter the supporting system of a joint-venture vehicle manufacturer, it is necessary to first send parts and components to the overseas headquarters of a foreign-invested automobile company for certification. However, such certification normally takes 2 to 3 years, even if all testing procedures have been passed. The market cycle for the relevant models has ended, and since the parts that need to be certified are often dedicated parts for specific models, the parts are basically invalidated after certification ends. Foreign-funded parts manufacturers have started to synchronize certification as they developed a model as early as the automaker.
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 currently more than 2,000 fixed-point parts manufacturers in China, and actually more than 5,000 companies are producing parts and components. These companies are very small, of which more than 80% of the companies 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 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.
No independent brand is a big problem
“We must have a truly independent brand of parts and components companies before we can truly own our own brand of automakers.†Shen Hui, president of the US Borg Warner China, believes that “parts and components companies should receive more attention. There is hardly a prominent independent brand for domestic parts. This is a big problem."
In fact, this issue is getting government attention. At the National Science and Technology Conference held in January this year, the Central Government raised the ability to build independent innovations to the height of the national strategy, and it immediately caused great repercussions in the automotive industry.
Experts believe that although the Chinese auto industry based on the "market-for-technology" strategy has developed rapidly in recent years, it has gradually exposed the drawbacks of weak independent research and development capabilities and lack of core technologies. However, if the parts and components industry does not have the capability of independent research and development and innovation, the independent innovation of the vehicle companies will hardly have a big role. Therefore, how to quickly cultivate and support independent innovation in the parts and components industry is also the only way for China to build an innovative automobile industry.
China National Machinery Industry Enterprise Management Association cooperated with the Patent Search Center of the State Intellectual Property Office and conducted the first patent investigation of the Chinese auto parts industry between June and October 2005. The survey results showed that the total number of Chinese and foreign patents for parts and components registered in China accounted for only about 2% of the world's total. Only 22% of the domestic parts and components companies own patents in China. The remaining 78% are owned by multinational parts companies, and the growth rate is quickly.
Industry sources pointed out that at present, there are as many as 8,000 auto parts manufacturers in China. They must break through patent barriers on key technologies and shorten the gap with the international advanced automobile manufacturing industry. Domestic companies must first improve patented technology and fully recognize and value patents. Technology Promotes Independent Innovation.
In the context of economic globalization, China’s auto parts companies have gone abroad to join the global procurement system, which is the only way for development. This must enrich the traditional products produced by China's spare parts enterprises, attach importance to brand management, and develop a global marketing network and sales channels.
Jiang Lei, executive vice chairman and secretary-general of the China Association of Automobile Manufacturers, pointed out that in the next five years or even longer, China's auto parts industry needs to shift from simple production and processing to mastering core technologies; from general-purpose parts and components The transfer of high-tech parts and components products with high technological content and added value; the shift from single companies to large-scale professionalization; and the shift from simple and traditional development and supply methods to systematic modular branding. In addition, the auto parts industry must gradually shift its use of new materials and new electronic technologies.
Some people say that in the next 5 to 10 years, China will not only provide support for domestic auto companies, but will also deliver parts and components for global auto companies. China will most likely become the world's spare parts distribution center. "Parts have a major impact on the development of the vehicle." Chen Weinong, secretary of the Party Committee of the China Automotive Technology and Research Center, also stated that the upgrading of China's auto industry and the establishment of its own brand will depend on the production of auto parts, raw materials, process equipment and components themselves. Breakthrough.
Local parts companies face 3 new challenges
In 2006, local components companies will also face the challenge of three new forces.
The first is that powerful domestic raw material companies have begun to engage in the parts and components industry. In June 2005, Baosteel announced that it would fully enter the auto parts industry, with the production of wheels, bodywork, power transmission systems and chassis systems as the core, and strive to make Baosteel auto parts enter the top 3 in the same industry in China by 2010. Despite the lack of high-end auto parts development capabilities, lack of a sound management system, and talent support, it is a gateway that Baosteel and other raw material companies cannot easily bypass. However, if they use mergers and acquisitions to accelerate the development of their parts and components business, their potential should not be overlooked.
Second, the second, IT giants have also begun to enter the auto parts industry. In 2005, Lenovo took the lead in the auto parts industry. Subsequently, Microsoft, Motorola and other international IT giants also expressed their desire to enter the auto parts market. In the current automotive industry, electronic systems can account for 70% of the total cost of a limousine and 30% of the total cost of an ordinary car. It is predicted that the development of the world's auto industry in the future will fall into the automotive electronics, intelligence, networking technology and applications, this will undoubtedly make IT companies likely to control the next generation of automotive electronic accessories market standard voice.
Third, small foreign companies will share the profits of the domestic spare parts industry in a joint and collaborative manner. At present, overseas second- and third-tier enterprises and even smaller ones are prepared to take a bite on the big "cake" in the Chinese market. Compared with Chinese companies, although they do not have a great advantage in terms of cost, they are the common characteristics of these companies, and will surely pose a new round of challenges for local parts and components companies.