After more than 20 years of joint ventures in the Chinese auto industry, foreign capital has quietly controlled half of China's auto parts industry.
According to the information released jointly by the China Association of Automobile Manufacturers and the National Bureau of Statistics’ Industrial Transport Statistics Department recently, there are 54 foreign-invested companies in the "2005 China Top 100 Auto Parts" ranking. During the "Eleventh Five-Year Plan" period of China's auto parts industry, how could the local parts and components companies, which have been losing ground, lose their lives?
Foreign-funded reservoir
“In the list of top 100 parts and components companies, there are as many as 20 wholly foreign-owned enterprises,†said a person from the Industrial Policy Research Association of the China Association of Automobile Manufacturers. When the top 100 auto parts companies were promulgated for the first time last year, the organizers intended to reflect “Chinese local company characteristics†and did not include wholly foreign-owned enterprises. "The top 100 list compiled by the industry's authoritative department without any commercial colors can bring about a great brand effect to the company. Therefore, this wholly foreign-owned company also generally requires participation."
“Since the first peak in parts and components joint ventures brought by the localization of Santana, in the late 1990s, China's parts and components industry ushered in the second joint venture climax.†According to Wu Songquan, an information institute of China Automotive Technology and Research Center, The new foreign-funded parts and components enterprises newly built for the complete vehicle joint venture during the second upsurge are much more investment-intensive than the former.
Statistics from the end of 2004 of the Ministry of Commerce show that foreign-invested auto parts companies have reached more than 3,000. Jiang Lei, executive vice president of the China Association of Automobile Manufacturers, said that during the “10th Five-Year Plan†period, the auto parts industry has become the focus of foreign investment. Not only that, but also the core technology of key parts and components, and relying on the advantages of supporting OEMs to enter the Chinese market, foreign-funded parts companies are still assembling.
Shen Ningwu, deputy secretary-general of the China Association of Automobile Manufacturers, pointed out that the internationally renowned parts and components group has continuously increased investment in the domestic parts and components industry, and has formed a complete process system from research and development, training, production and sales, and began to realize its best in China. Division of labor and reasonable layout. At the same time, foreign investment in China’s auto parts and components has also undergone changes in its strategy: from equity participation to controlling, from joint ventures to sole proprietorship, and from ownership to monopoly markets.
“The parts and components enterprises established in China’s mainland, the proportion of foreign capital is increasing, and the profits of foreign companies are also increasing.†Jiang Lei said. Sun Muzi, a senior car analyst at Xinhuaxin, also stated: “With the promotion of the “Measures for the Management of Characteristics of Complete Vehicle Characteristics†and the increase in government intellectual property protection, more and more foreign auto parts companies have also entered. In China, the climax of the third round of foreign investment in auto parts has again arrived."
This round of new investment boom, in addition to Japan, South Korea, the United States, Germany and other traditional auto parts manufacturers follow the host plant stationed in China, from Switzerland, Spain and India and other places auto parts manufacturers have also set up factories in China to invest. According to incomplete statistics, there were more than 90 international parts and components companies that signed up for investment in China in 2005, and the amount of investment reached 4 billion U.S. dollars, which was 3.2 times that of 2004.
"Multinational companies plan to purchase 50 billion U.S. dollars worth of parts and components in low-cost countries by the end of 2007, of which 70% are in China. This has also contributed to the recurrence of foreign investment booms," said Sun Muzi.
Native New Hope
According to statistics, Wanxiang Group, the top 100 company, achieved sales revenue of 25.215 billion yuan in 2005, an increase of 4.4 billion yuan compared with a year ago, ranking first in the world in terms of growth rate. However, compared with the top 100 auto parts suppliers in the world, its sales revenue gap is still more than 10 times.
Among the top 100 companies, there are 19 engine companies, all of which are ranked high. In addition, they are high-tech manufacturers of automotive electronic appliances, transmission and brake safety systems, and engine parts and components. These are precisely the weaknesses of local companies. More importantly, due to the small scale of local companies and the low operating efficiency, under the pressure of the current host plants to lower their purchasing costs year by year, their profitability space is gradually shrinking, and their living environment is deteriorating.
“We see that foreign capital accumulates its own advantages, but it can only manage a limited portion.†According to experts from the Industrial Policy Research Association of the China Association of Automobile Manufacturers, the market share of foreign investment in the future will continue to grow.
“The precondition for the development of independent brands is to develop the auto parts industry vigorously. The introduction of advanced foreign technology components and spare parts is the best solution.†A person from the Chinese auto parts industry associate expressed his opinion that most parts and components companies Therefore, under this background, it is also not realistic to impose large-scale administrative restrictions on foreign investment in parts and components.
According to informed sources, in the "Study on the development strategy of auto parts industry" drafted by the China Automotive Technology and Research Center, the country is planning to restrict foreign investment in auto parts. "In some important areas, when foreign investment exceeds a certain amount, it must be submitted to the central government for approval."
According to the China Association of Automobile Manufacturers, the way out for China's local auto parts companies is to strive to become an international auto parts procurement center. Jiang Lei pointed out that at present, we are facing a new wave of international auto industry shift, realizing the transformation from local and regional production to global production, and forming a new batch of industrial clusters. China's auto parts industry must seize the opportunity to use the established foundation to accelerate the construction of the parts industry base to meet the needs of the international OEM and after-sales service market. (Author: Chen Haisheng)
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