To be a "little giant" in China's auto parts industry


China has now become the third largest automobile producer in the world, and its share of the world's automobile production has increased from 3.6% in 2000 to 10.5% in 2006. Motorcycle production accounts for more than 45% of world production. The contribution of China’s auto industry to the development of the world’s auto industry is continuously improving.

While being pleased with the achievements made by China’s auto industry in recent years, the automotive industry has deeply felt that it is a long way to go to complete the overall goals set out in the “Eleventh Five-Year Plan” of Chinese Auto Parts. Because China's auto industry is not only full of vehicles, especially the self-owned brands of cars are obviously weak, independent development capacity is insufficient, key key technologies are missing and other major problems; another major problem is that China's auto parts industry lags behind the development of the entire vehicle industry, which is a constraint. The bottleneck of the Chinese auto industry is becoming bigger and bigger. Therefore, how does China's auto parts industry develop? Which of these, especially vehicle companies are driving the development of parts and components companies? How do the parts and components companies serve the entire vehicle company, and then promote the development of the vehicle company? What kind of parts and components matching system should be built by China's vehicle manufacturers and what kind of relationship model should be adopted? Is learning European and American models? Or learn Japanese and Korean models? In addition, how can Chinese auto parts companies create a path of transcendental development in the fierce market competition? These problems have become a hot spot for the entire automotive industry, including vehicle manufacturers and component companies.

China's auto parts industry development achievements and existing problems

China's automobile production and sales volume has been surpassing one million vehicles each year since 2001. In the first half of 2007, China produced and sold 4.457 million vehicles and 4.374 million vehicles, an increase of 22.4% and 23.3% year-on-year. Among them, passenger car production and sales were 3.151 million and 3.084 million, an increase of 20.9% and 22.3% year-on-year; commercial vehicles were sold and sold 1.305 million and 1.29 million, an increase of 26.1% and 25.9% year-on-year, and the overall growth of commercial vehicles and automobiles was the entry of the WTO. For the first time in 6 years. The production and sales of motorcycles reached 12.19 million and 12.062 million vehicles, a year-on-year increase of 13.4% and 15.2%.

In the first half of 2007, the accumulative total revenue of key enterprises (groups) of the national automobile industry totaled 486.3 billion yuan, a year-on-year increase of 26.6%; the industrial added value was 109.1 billion yuan, an increase of 34.1% year-on-year; and the total profit was 30.2 billion yuan, a year-on-year increase of 65.8%; The number of auto exports was 241,000, an increase of 71.2% year-on-year, with an export value of 2.7 billion U.S. dollars, an increase of 110.7% year-on-year; parts and components exports were 7 billion U.S. dollars, an increase of 30.9% year-on-year.

The rapid development of the automotive industry in these years has brought a vast space for development to the auto parts industry. Its main achievements are as follows:

The increasing strength of auto parts industry lays the foundation for the rapid development of the auto industry.

In 2006, a total of 4,712 enterprises were engaged in auto parts and engines above the national scale, achieving a total industrial output value of 550.6 billion yuan, sales revenue of 534.1 billion yuan, total profit of 35.8 billion yuan, total assets of 524.2 billion yuan, 1.22 million employees, and sales profits The rate is 6.7%. In addition, after these years of technological transformation and technology introduction, the product level, equipment level, manufacturing technology, and management level of parts and components companies have been greatly improved, resulting in a relatively complete, larger scale, and a certain level of automotive zero. Component industry base; provides basic guarantees for the production of 7 million vehicles per year, 20 million motorcycles and 32 million automobiles and 80 million motorcycles.

As the industrial base of auto parts continues to increase, the production cycle of imported models has been shortened, and the pace of domestic autos has been accelerated.
At present, the rate of localization (indigenization) of imported vehicles has reached more than 80%. The time required for localization will be reduced from 3 to 4 years (eg, Jetta, Beverly, etc.) from 7 to 8 years before the 8th Five-Year Plan (such as Santana and Xiali) to doubling after the Ninth Five-Year Plan. The localization rate of the newly introduced car models has reached more than 40% at the beginning of production (such as Shanghai GM Buick, Shanghai Volkswagen Passat, Guangzhou Honda Accord, etc.). The era of production of a model of domestically-made cars for one to two decades has passed, and now there are twenty or thirty new models on the market every year.

High-tech auto parts products continue to enrich the market, basically meeting the needs of automotive product development.

As the product's automotive energy-saving, environmental protection, safety and other technical regulations gradually tightened, the technical level of auto parts is also gradually increased. In China, due to the introduction of advanced technologies and joint ventures with foreign advanced companies, some high-tech parts and components have begun mass production, began to be used for domestically produced automobiles, and continue to enrich the automotive market, such as engine management systems (EMS), EFI, Euro III or even Euro IV EFI engines, anti-lock brakes (ABS), airbags, electric power steering, tire pressure monitoring systems (TPMS), global positioning navigation systems ( GPS, automatic transmission (AMT, CVT, AT), etc. The continuous improvement of the performance and quality level of key parts and components ensures that the entire vehicle meets the requirements of safety, environmental protection, energy saving and other technical regulations.

Chinese-owned auto parts companies have gradually increased their ability to develop their own products. While developing parts and components for domestic passenger cars, trucks, and economical cars, they are moving into key parts and components with higher technological content, which is an autonomy for China’s auto industry. Innovation and development of independent brands lay the foundation.

Some Chinese auto parts companies independently innovate in high-performance engines, automatic transmissions, automotive electronic products (including control systems and entertainment systems), alternative energy sources, and new energy technologies through original innovation, integrated innovation, and innovation after introduction. Accelerate the pace. Some of them are already supporting their own brand cars.

The development trend of "clustering" of the auto parts industry shows that the country has formed six major automotive industry belts.

With the rapid development of China's auto industry, the auto group has gradually grown and expanded. The number of parts and components manufacturing plants around the main engine plant has increased rapidly, the scale has also continuously expanded, and the professional cooperation capability has been continuously enhanced. Production companies have begun to develop in a “clustered” direction. Now there are six major auto industrial belts in Northeast China, Beijing, Tianjin, Central China, Southwest China, Yangtze River Delta and Pearl River Delta. The emergence of "clusterization" of the auto parts industry has improved the efficiency of the industry chain's vertical extension and horizontal cooperation of related industries, resulting in agglomeration and synergy, and promoting the innovation and development of the auto industry.

The export of auto parts and components has grown rapidly, achieving a greater amount of exports than imports.

With the continuous improvement of the level of parts and components products, the export value has grown rapidly in recent years. In 2006, the total export value of auto parts was 11.5 billion U.S. dollars, an increase of 35% year-on-year, exceeding the total import volume of 11.1 billion U.S. dollars. Products began to enter the OEM market from the after-sales accessories market; from low-value-added products to high value-added products; from a single product exports to the development of capital and technology exports, especially some independent brand products began to enter the international procurement system, such as automatic Transmissions, airbags, anti-lock brakes, etc.

While seeing the achievements of China's auto parts industry, we must also face up to the problems we face. The rapid development of the automotive industry in recent years has also exposed the problem of lagging auto parts development. After China's accession to the WTO, the auto parts industry is fully open to the outside world, and it is under greater international competitive pressure. In addition to the existing problems of small companies, poor efficiency, product convergence, low technological content and standardization, and low risk-resisting capacity, they also face challenges such as strong capital controls, market expansion, and technology blockade by multinational companies. Performance in the following areas:

The overall level of China's auto parts industry is still relatively low, and its competitiveness is not strong.

At present, there are an estimated 20,000 to 30,000 auto parts enterprises in China. There are widespread problems such as decentralized funds, market segmentation, lack of talents, low product levels, and low competitiveness of enterprises. In 2006, the number of companies and employees in the Automotive Parts and engine industry accounted for 74% and 54% of the total automotive industry, while total output value and assets accounted for only 35% and 39% of the total. In the recent three years (2004-2006), under the situation of rapid development of automobile production and sales in China, the total output value of auto parts and engine industry increased by 42.6%, sales revenue increased by 42.9%, and total profit increased by only 13.6%.

In the past, the state had played an active role in the key support and concentrated investment measures adopted by auto parts companies. However, with the large number of foreign investment and diversification of investment, the ability to regulate and control weakened. There was an irrational situation in which dozens of companies used the same type of parts at the same time. There was a lack of an industrial structure with a clear hierarchy and a reasonable division of labor. Lack of systematic development and modularization The auto parts company group that is made up of suppliers.

The investment intensity of auto parts industry is not enough, it is difficult to increase the production technology level of enterprises, and it is difficult to form economies of scale.

As most of the cars currently produced in the country are imported foreign brands and technologies, most of these products use the original parts supporting systems and quality standards, so Chinese parts and components companies are unlikely to enter their purchasing systems. In addition, the country's investment in the construction of auto vehicle companies have a relatively complete supply chain layout, the vehicle and parts more than adopt a "vertical integration" model, and the main parts and components production is basically closed within the group. Although some automobile groups are exploring the separation of parts from the group and setting up new “zero-relationships” such as Dongfeng’s parts business unit and FAW’s Fu Ao Auto Parts Co., Ltd., it is still a small part. Besides, it needs a process. Therefore, most of the domestic social component companies survive in the cracks. On the surface, the development speed of China's auto parts is very fast. In fact, compared with the OEM market share of the whole vehicle, the proportion of possession is decreasing.

It is gratifying that domestic auto companies are now striving to develop their own branded products, especially car products, and the market share has continued to increase, reaching about 30% in the first half of 2007. As the independent brands need to establish new supporting systems and have full control over them, they provide domestic auto parts companies with excellent market opportunities to exercise their own abilities and exert localized advantages.

In this case, vehicle companies, especially those with their own brands, must establish a sense of responsibility that drives the development of Chinese-owned auto parts companies. Vehicle companies must give Chinese auto parts companies market opportunities, support their innovation activities, and prioritize the use of Chinese-funded parts and components in order to meet product design requirements, creating conditions for the development of Chinese auto parts companies. The entire vehicle company must also change the relationship model between the past and the parts and components companies, and actively explore new "win-win relationship model" of cooperation and win-win.

The parts and components companies must also establish the ideology of “market competition and survival of the fittest”, continuously strengthen their competitiveness in terms of technology, quality, price, and service, and actively participate in the development of the entire vehicle company.

In the face of fierce market competition, auto parts companies must accelerate the pace of industrial mergers and reorganizations, and it is difficult to grow bigger and bigger without scale.
In order to become an international parts procurement center, auto parts companies must change the current situation of “weakness, smallness, and dispersion” and poor scale effect. China's existing large and small tens of thousands of auto parts companies, there are also thousands of companies on the scale. From the analysis of development trends, ultimately, most will be eliminated and merged, and only those companies with strategic vision and development direction can be retained. According to the laws of automobile economies of scale, parts and components companies must take the path of grouping, scale, and specialization, and they must be able to form a number of large-scale component manufacturing companies with system development capabilities and modular supply in the country. Therefore, auto parts companies must assess the situation, follow the development trend of the auto industry, and actively carry out various forms of cooperation and cooperation, and constantly improve the level of specialization and scale. In addition, companies that have already taken the lead should play the leading role of the industry, and in the process of stimulating the common development of the industry's weak and small enterprises, they will continue to grow and become truly “small giants” in the industry.

Adhere to both international and domestic markets, and increase market share while participating in international competition.

At present, China's auto parts industry is in a period of strategic opportunity to participate in international competition and become an international auto parts procurement center. On the one hand, the world is facing a new round of automobile industry transfer. China is a key area for industrial transfer of these automobile developed countries. On the other hand, some countries behind the automobile are seeking cooperation in auto parts. Therefore, China's auto parts enterprises must grasp opportunities in a timely manner, make use of the already established industrial foundation, make use of comparative advantages, and form a batch of powerful auto parts backbone enterprises and brand-name products as soon as possible to meet the needs of the international market. Entering the international market will help improve the popularity and market share of China’s auto parts companies in the international market; it will help establish a quality certification system that meets international standards; it will help integrate the resources of the domestic parts and components industry and further expand the popularity in the domestic market. And market share. This is an inevitable way for auto parts companies to become stronger and bigger.

From 1986 to 2005, China’s auto industry had a total investment of 350 billion yuan, of which 293.1 billion yuan was spent on complete vehicles, 131.6 billion yuan in spare parts and engine investment, and a ratio of 1:0.4 to 1:0.5 of investment in complete vehicles and parts and components. The proportion of national vehicle and component investment is generally 1:1.3~1:2. The investment in spare parts and components should be greater than the investment in whole vehicles, but in our country, the investment in parts and components is lagging far behind that in vehicle investment.

Parts and components companies lack independent innovation and independent development capabilities, and they lack their own brands.

Due to the small scale, poor efficiency, low investment in scientific research, and lack of technical talents in China's auto parts enterprises, together with most models of car production, they are imported from abroad, resulting in strong dependency of parts and components supporting companies, products and technologies. Reliance on vehicle companies, dependence on multinational corporations, poor awareness of independent innovation, and weak capacity for independent development; coupled with the lack of integrated and effective measures in the country’s independent innovation policy system and system development, resulted in the overall level of the auto parts industry largely in the 1990s. International level.

The new entry strategy adopted by multinational companies is squeezing the living space of Chinese auto parts companies.

After China's accession to the WTO, the auto parts market and the capital market have been fully liberalized, and foreign companies have undergone major changes in their strategy for entering the auto market in China. They use China’s commitment to the WTO to implement measures such as capital controls, market monopolies, and technical blockades. Performance in the way of cooperation changed from past technology transfer to joint venture control, foreign ownership, or the use of spare parts and low tax rates, the use of imported parts to complete the assembly of the vehicle; or with the joint venture's joint venture, the original system components Companies are brought into China to support them; or through the opportunity of reforms, they will be able to cheaply acquire parts companies that are influential in China. According to incomplete statistics, there are currently more than 1,200 auto parts joint ventures in China. Foreign auto parts manufacturers, with their strong economic and technological strength, mature products and production management experience, and strategic alliances with multinational automotive groups, have occupied the major car market in China and have controlled high-tech and high-efficiency products. field. Moreover, the various preferential policies and favorable conditions enjoyed by foreigners have made China's spare parts enterprises in a rather unequal competitive position.

The failure to establish long-term cooperation, common development, and mutually beneficial win-win strategic partnership between the parts factory and the vehicle manufacturer is not conducive to the healthy development of China's auto industry.

At present, parts and components companies and vehicle companies are mostly pure supply and demand, strategic supply chain is not strong, and parts and components companies are in a relatively weak position. Vehicle companies often shift the market risk to parts and components companies. They lack technical support and management guidance for parts and components companies. They lack coordinated development and collaborative design. They lack the sense of responsibility for achieving win-win results, resulting in partial economic returns for parts and components companies. Low, product upgrades, and slow enterprise upgrades.

Some Thoughts on the Development of China's Auto Parts Industry

Faced with the severe situation and existing problems in China's auto parts industry, how to make China's auto parts industry take a more healthy development path needs the whole industry to discuss together.

Auto parts enterprises must unswervingly adhere to independent innovation, and only occupy the commanding heights to win the initiative.

The so-called "commanding heights" are key components with high technological content, such as high-performance engines, automatic transmissions, and automotive electronic control systems. The so-called "occupation" is to introduce high-tech zeros of their own characteristics through the introduction of digestion and absorption and independent research and development. Parts products, occupy the vehicle support and after-sales service market.

As we all know, the high added value of auto parts has high added value, and it is easy to enter the complete vehicle supporting system. It is a fundamental measure for auto parts companies to grasp the initiative for development. However, to make such parts requires a large amount of capital investment, requires high-quality development team, requires time and a large number of experimental data accumulation, requires a strong sense of self-discipline and spirit, but also the actual needs of the vehicle company's project needs. It may seem that "there is no longer hydrolysis of near thirst," but it is the long-term strategy that must be taken by parts and components companies and the direction that must be adhered to. Otherwise, it will still bring in doctrines and dependencyism. If the desire is not reached, it will never be able to escape the passive squeeze.

The entire vehicle company must establish a sense of responsibility for driving the development of Chinese-funded auto parts enterprises. Through actively exploring and constructing a “zero-to-zero relationship model” for common development, the goal of cooperation and win-win between vehicle manufacturers and parts and components companies is achieved.

(Note: This article is an excerpt of the work report of the “China Association of Automobile Manufacturers 2007 Annual Conference of Parts and Components Industry” made by Comrade Gu Xianghua on behalf of the China Association of Automobile Manufacturers. The text has been slightly changed. The title of the article is for the editors.)

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