With the vigorous development of the automotive industry, China's auto parts industry is gradually becoming the focus of attention. In recent years, more and more auto parts exports have also let people see the broad prospects of China's parts industry. However, it is an indisputable fact that China’s auto parts and components industry is growing up, being big but not strong, with low technology and weak competitive strength. At the same time, more and more multinational car manufacturers are seeking to dominate the parts industry in a wholly-owned or controlled manner. Entering the "Eleventh Five-Year", China's auto parts industry will go from here? At the recent "High-level Forum on the Development Trend of China's Auto Parts and Components", relevant experts and scholars discussed this issue. The information from various parties shows that although there is a danger of marginalization in China's parts and components industry within a certain period of time, the localization of China's auto parts industry is still promising in the face of both domestic and international markets.
Parts industry scale takes shape
The development of China's auto parts industry started in 1953. It was mainly based on the start of construction of FAW and the 2nd Automobile to support trucks. Since 1978, China's car industry has started to develop, and the parts and components industry has also entered a growth period. Supporting cars has also increased the technological content of the industry. In the 1990s, with the increase in foreign investment and localization rates, the parts and components industry began to grow. Since 2000, auto parts have made great progress. The blowout of the auto market and the promulgation and implementation of the new automobile industry policy have also directly promoted the rapid development of China's auto parts industry.
The auto parts industry has begun to take shape. The direct manifestation is the emergence of a large number of highly competitive parts and components manufacturers. According to the statistics of China Association of Automobile Manufacturers, in 2004, the top 100 auto parts enterprises in China achieved a total annual sales revenue of RMB 196.6 billion, accounting for 59.4% of the total revenue of the parts and components industry that year. Among the top 100 companies, there are 5 with income exceeding 10 billion, 4 with 5 to 10 billion, and 35 from 1 to 5 billion. In 2005, China's parts and components manufacturing enterprises further expanded. Among them, Wanxiang Group, which is in a leading position, achieved sales revenue of 26.2 billion yuan in 2005, a net increase of 5.4 billion yuan over 2004.
The development of parts and components manufacturers has also rapidly changed the industrial structure of China's auto parts. Shen Ningwu, deputy secretary-general of the China Association of Automobile Manufacturers, believes that at present, China’s auto parts and components have basically got rid of the old “small quantity, small scale, and poor quality†situation. The level of manufacturing has increased significantly, and it has formed a complete supply for domestic automakers. Supporting systems; some of them have also been able to independently develop and supply systems, have opened up overseas markets, entered the international procurement system, and export volume has also increased year by year.
Is localization or marginalization?
However, it is worth noting that while the rapid development of China's spare parts enterprises, foreign investment in China's auto parts and components is also growing. At present, more than 70% of the world's top 100 parts suppliers have started business in China.
After the new automobile industry policy was promulgated, due to the different degree of protection of the whole vehicle and parts by the country, foreign auto parts companies are making three changes in their investments in China: namely, changing from equity participation to controlling, from joint venture to sole proprietorship, and from possession of the market. To the monopoly market. As the foreign-funded parts and components enterprises have the advantages of strong technical strength, scale, and strong development capability, and they have the advantage of being a priority for the OEM, they have stronger competitiveness than other domestic manufacturers. As a result, industry insiders have warned that Chinese auto parts companies are in danger of being squeezed by foreign companies, and the parts and components industry is facing a test of "marginalization."
In view of this, Shen Ningwu believes that although foreign-funded parts companies will continue to control and price monopolies for key technologies for a certain period of time, the "marginalization" of the auto parts industry is not terrible in the long run. For China's parts and components industries that are growing up, localization is still promising.
It is understood that the so-called localization of auto parts is actually a powerful foreign company to come to China alone or seek cooperation partners to establish joint ventures for the production of complete vehicles in China, for the supply of foreign suppliers to China. The result of localization is that foreign companies occupy a market, which will inevitably lead to the differentiation and reorganization of China’s auto parts companies. This will not only help change the original appearance of the “particulate, chaotic, and bad†parts industry, but also enhance China’s The level of parts manufactured is conducive to domestic procurement of vehicle companies, which in turn helps China become a global procurement center.
"From a positive perspective, China's parts and components companies need to study measures to mitigate risks and how to better integrate into the localization system of parts and components to survive and develop." Shen Ningwu thinks: "At present, some domestic parts and components companies have entered With the world advanced level, it is entirely possible to grow stronger and bigger."
Therefore, for many domestic parts and components companies, the positive attitude to resolve the risk of marginalization of the parts and components industry should be to adapt to the trend of localization, take the initiative to participate in reorganization and merger, and gradually reduce and get rid of the influence and control of vehicle companies. A relatively independent parts and components industry improves the overall competitiveness of the industry, and cannot rely on the country's change of policies and restrictions on foreign investment to protect the existing uncompetitive pattern. This restructuring and reform, to some extent, is likely to be a "phoenix nirvana" type of regeneration process.
Parts exports expect three changes
For Chinese auto parts industry, localization is by no means the ultimate goal. How to base itself on localization and courage to go out and face the domestic and international markets is the key to China's auto parts and components industry being completely free from marginalization and further development and growth.
China's auto parts exports have huge business opportunities. Relevant information shows that by 2010, the total trade volume of auto products in the world will reach 1.2 trillion US dollars. The auto giants will accumulate up to 50 billion U.S. dollars worth of spare parts in low-cost countries by 2007, of which 70% plan to target China. According to the China Association of Automobile Manufacturers, it is estimated that by 2010, China’s auto parts exports will reach 35 to 40 billion US dollars.
However, achieving large-scale export of auto parts is not an easy task. At present, China's auto parts exports are still dominated by low-value-added products, mainly raw material-consuming products, mainly after-sales markets, and individual-based export orders. To change the status quo will depend on the improvement of the overall strength of China's spare parts. Therefore, while warning that the parts manufacturers must “vigilize the price war of excessively low-grade product exports and self-indulgence rollingâ€, Shen Ningwu also suggested that relevant departments need to “consciously guide export enterprises to achieve three changesâ€: that is, from the after-sales service The transformation of OEM parts has shifted from low-value-added products to high-value-added products, from scattered exports to orderly management, so as to truly form a virtuous cycle of “increasing exports, increasing benefits, and preventing risksâ€. Text/Reporter Li Hui