I. Characteristics of China’s parts and components supporting market
I believe that many suppliers are exploring this problem, as the old saying goes: know yourself, know your enemy, and you will win a hundred battles.
For suppliers in the transition stage or preparing to enter China’s auto parts supporting industry, grasping the characteristics of the domestic supporting market can reduce unnecessary “tuition”. The characteristics of the domestic supporting market can be summarized as follows:
1. Compared with the after-sales market, there are fewer varieties, but the quantity of each batch is relatively large.
2. Higher technical difficulty than after-sales market.
Due to the direct control and participation of oEMS, the technical requirements will be much higher than the aftermarket;
3. In terms of logistics, the timeliness and continuity of supply should be absolutely guaranteed, and oEMS should not stop production because of this;
Ideally, warehouses would be located around the oEMS.
4. High service requirements, such as possible recall.
In addition, even if the model you supply has been discontinued, you generally need to guarantee parts supply for more than 10 years.
For many suppliers, there is not much room left in the domestic market, and developing overseas markets is a top priority.
Second, the current situation of Chinese auto parts manufacturing enterprises
1. China’s local component manufacturers face many difficulties
In recent years, with the rapid development of China’s automobile industry, the strength of vehicle manufacturers has been greatly enhanced.
In sharp contrast, China’s auto parts industry is still far from becoming bigger and stronger.
In the background of rising raw materials, the appreciation of the Renminbi, rising labor costs and repeated cuts in export tax rebates, whether to raise prices or not is a dilemma for every enterprise.
However, for China’s local component companies, the price hike may mean the loss of orders, because the products themselves lack core technology, if they lose the traditional cost advantage, then may encounter no one to pay for “Made in China” embarrassing situation.
In 2008 China Shanghai International Auto Parts Exhibition, a number of parts suppliers said that they obviously felt the pressure from the international market. In the past few years, enterprises which could create good profits, under the dual effect of raw material rising and RMB appreciation, their profit margins have been much worse than before, and their export profits are getting thinner and thinner.
The competition in the domestic automobile supporting market is becoming more and more fierce, and the gross profit of the enterprises that do the after-sales supporting market is declining, with an average level of about 10%.
In addition, multinational component companies have entered China and rapidly expanded in the field of passenger car components and commercial vehicle components, leading to severe challenges for Local Component companies in China.
2. Strong momentum among multinational component suppliers
In contrast to the increasingly tough times for local suppliers, multinationals are thriving in China.
Denso of Japan, Mobis of South Korea, And Delphi and Borgwarner of the United States, among others, have wholly owned or controlled companies in China, and their businesses are surging on the back of strong growth in the Chinese market.
Yang Weihua, visteon’s marketing director for Asia Pacific, said: “The rise in raw materials has taken away the low-cost advantage of local suppliers, but Visteon’s business in China will still grow significantly.”
“The immediate impact will be on local suppliers, although the impact may not be felt for another year or two.”
From 2006 to 2010, Borgwarner’s sales in China will achieve the ambitious goal of “five times growth in five years”, said a source from borgwarner (China) purchasing department.
At present, Borgwarner not only supports local Oems in China, but also uses China as a production base for global export.
“The change in the RMB/US dollar exchange rate will only affect exports to the US, not enough to affect the strong growth of borgwarner’s overall business in China.”
Liu Xiaohong, communications manager for Delphi China, is optimistic that growth in China will be more than 40 per cent this year.
In addition, According to Jiang Jian, vice president of Delphi (China), its business in the Asia-pacific region has been growing at a rate of 26% every year, and its business in China is increasing by 30% every year.
“Because of this rapid growth, Delphi has decided to establish its fifth technology center in the Asia Pacific region in China, and work is underway.”
According to relevant statistics, the number of foreign-invested parts and components enterprises in China has reached nearly 500. All multinational suppliers, including Visteon, Borgwarner and Delphi, have established joint ventures or wholly owned enterprises in China without exception.
3. Marginalization knockout competition officially starts
Domestic suppliers, most of them from China, have been increasingly sidelined in the battle between foreign and domestic investment.
A typical example is that almost all the domestic core components enterprises are completely monopolized by multinational companies in the form of sole proprietorship or holding.According to statistics, foreign investment in China’s auto parts market has accounted for more than 60% of the share, and in the car parts industry, some experts estimate that it will reach more than 80%.In addition, in the automotive electronics and other high-tech products and key areas such as engine, gearbox and other core components, foreign control of the market share is as high as 90%.Some experts even warned that as parts suppliers upstream of the auto industry chain, once they lose their dominant position in the market, it is likely to mean that the local auto industry will be “hollowed out”.
At present, China’s auto parts industry has seriously lagged behind the development of the whole vehicle, and the overall competitiveness of China’s auto parts enterprises is declining. Due to the serious thought of the industry’s competent departments attaching more importance to the main engine than parts, the lag has become the biggest obstacle to the development of China’s auto parts industry.
While Chinese suppliers are growing fast, the lack of core technology in their products, coupled with weakness in basic industries such as steel manufacturing and industrial plastics, are reasons for automakers’ lack of confidence in local component makers.Take Borgwarner (China) as an example. Currently, nearly 70% of borgWarner’s suppliers come from China, but only 30% of them are likely to be included in the core supplier list, while other suppliers will eventually be eliminated.
The component supplier ecosystem can be divided into three levels according to the strength and division of labor:That is, Tier1 (tier) is the supplier of automobile system, Tier2 is the supplier of automobile assembly/module, and Tier3 is the supplier of automobile parts/components. Most of the domestic parts enterprises are in the Tier2 and Tier3 camp, and there are almost no enterprises in Tier1.”
Currently, Tier1 is almost dominated by multinational component companies such as Bosch, Waystone and Delphi, while most local enterprises are small component suppliers of Tier3 with raw material production, low-technology content and labor-intensive production mode.
Only by carrying out technological innovation and developing high value-added products can Chinese auto parts manufacturers completely get rid of the situation of “being increasingly marginalized in production, technology and research and development”.
Three, local auto parts supporting enterprises how to highlight the encircling
With the rapid development of China’s automobile industry, China has become the world’s third largest automobile consumer.In 2007, the car PARC will reach 45 million, among which the private car PARC is 32.5 million. In recent years, China’s car PARC has grown rapidly, ranking 6th in the world. By 2020, it may reach 133 million, ranking second in the world, second only to the United States, and then it will enter a stable development period.
It has unlimited business opportunities, full of charm, is waiting for us to develop the “gold mine”.With the rapid growth of automobile, auto parts industry has also achieved rapid development.The Chinese market the huge cake has almost all of the international famous brand of auto parts, especially in recent years, such as harvest Delphi, visteon, denso, components for Michelin, muller and other international well-known brands, with the advantages of its international brand in the Chinese auto parts market soared, the formation of strong impact on the domestic auto parts market,Domestic auto parts development into a passive situation, outstanding international encircled has become a top priority for local auto parts enterprises.
1. Create a “resounding” independent brand to achieve brand breakthrough
Foreign auto parts brands often cleverly take advantage of the blind consumption psychology of Chinese consumers, and dress themselves as the most professional auto parts brands by virtue of their “foreign” and “international big company” coats to win the trust of consumers.At the same time, because of this psychological chong, many customers will be named to import high-grade accessories, because in their eyes, domestic accessories are only low-end products.
It can be said that brand disadvantage is one of the biggest disadvantages of Chinese local auto parts enterprises.In recent years, although China’s auto parts manufacturing has been greatly improved, but compared with the powerful international enterprises, we still have a big gap, our auto parts enterprises even do not have a few let people proud and proud of the “ringing” brand.Therefore, auto parts enterprises must pay attention to the shaping and highlighting of their own brand personality, and create Chinese brands with independent characteristics.An automobile expert believes that only by forming independent development system and capability, and forming independent development team, can parts enterprises finally show their own “brand” and form the competitiveness to break through the international siege.
The competition in auto parts industry is very fierce, especially in the case of increasingly intensified economic globalization, many international auto parts giants have entered China’s market, domestic auto parts enterprises are facing great pressure.Domestic auto parts enterprises should take the international first-class standards and enterprises in the industry as their target to catch up with standards and develop to a higher level.To practice one or two tricks or more others do not have the “trick”, improve the competitiveness of enterprise products from their own, to form an absolute advantage.We must rapidly expand our production capacity and scale, and quickly become stronger and bigger.To create a world-class strong independent brand, the formation of “high, special, strong” “brand effect”.In recent years, China’s auto parts enterprises have emerged some brands that stand firm in the market, such as universal bearings, etc., the scale of these enterprises is gradually expanding, the technical strength is gradually increasing, in the fierce competition to play their own world, to show their own brand.Such as professional production and operation high, middle-grade diesel engine piston, gear, oil pump of hunan riverside machine (group) co., LTD., in recent years, quickly adapt to the market, constantly enhance the level of product technology development and product quality, the products of the enterprises remain the advantage position in market competition, thus providing favorable conditions for enterprises to participate in the competition at home and abroad.”Jiangbin” brand piston has become a well-known brand in the industry, has been rated as the industry, provincial “famous brand products”.
2. Innovate core technologies to achieve high-end breakthroughs
The high-end market for auto parts has always been a competitive one.From the perspective of market profit, although high-end auto parts only account for 30% of the whole auto parts market at present, the profit greatly exceeds the total profit of middle and low-end products.Although China auto parts industry has been a breakthrough in high-end market, but foreign auto parts manufacturers, with its powerful economic and technical strength, mature products and production management experience, plus with multinational auto group formed a strategic alliance, occupied the main components for high-end market in China, the control of the high technology, high benefit product areas.But the domestic parts enterprises are “low-end dogfight” intensified, showing a “high-end loss” situation.
“Low-end chaos of Chinese auto parts industry” and “high-end loss” are the true portrayal of its position at the low end of the industrial chain, and the root cause of the current situation of Chinese auto parts industry lies in the lack of core technology of local enterprises, unable to show their “unique skills”.
It has unlimited business opportunities, full of charm, is waiting for us to develop the “gold mine”.With the rapid growth of automobile, auto parts industry has also achieved rapid development.The Chinese market the huge cake has almost all of the international famous brand of auto parts, especially in recent years, such as harvest Delphi, visteon, denso, components for Michelin, muller and other international well-known brands, with the advantages of its international brand in the Chinese auto parts market soared, the formation of strong impact on the domestic auto parts market,Domestic auto parts development into a passive situation, outstanding international encircled has become a top priority for local auto parts enterprises.
1. Create a “resounding” independent brand to achieve brand breakthrough
Foreign auto parts brands often cleverly take advantage of the blind consumption psychology of Chinese consumers, and dress themselves as the most professional auto parts brands by virtue of their “foreign” and “international big company” coats to win the trust of consumers.At the same time, because of this psychological chong, many customers will be named to import high-grade accessories, because in their eyes, domestic accessories are only low-end products.
It can be said that brand disadvantage is one of the biggest disadvantages of Chinese local auto parts enterprises.In recent years, although China’s auto parts manufacturing has been greatly improved, but compared with the powerful international enterprises, we still have a big gap, our auto parts enterprises even do not have a few let people proud and proud of the “ringing” brand.Therefore, auto parts enterprises must pay attention to the shaping and highlighting of their own brand personality, and create Chinese brands with independent characteristics.An automobile expert believes that only by forming independent development system and capability, and forming independent development team, can parts enterprises finally show their own “brand” and form the competitiveness to break through the international siege.
The competition in auto parts industry is very fierce, especially in the case of increasingly intensified economic globalization, many international auto parts giants have entered China’s market, domestic auto parts enterprises are facing great pressure.Domestic auto parts enterprises should take the international first-class standards and enterprises in the industry as their target to catch up with standards and develop to a higher level.To practice one or two tricks or more others do not have the “trick”, improve the competitiveness of enterprise products from their own, to form an absolute advantage.We must rapidly expand our production capacity and scale, and quickly become stronger and bigger.To create a world-class strong independent brand, the formation of “high, special, strong” “brand effect”.In recent years, China’s auto parts enterprises have emerged some brands that stand firm in the market, such as universal bearings, etc., the scale of these enterprises is gradually expanding, the technical strength is gradually increasing, in the fierce competition to play their own world, to show their own brand.Such as professional production and operation high, middle-grade diesel engine piston, gear, oil pump of hunan riverside machine (group) co., LTD., in recent years, quickly adapt to the market, constantly enhance the level of product technology development and product quality, the products of the enterprises remain the advantage position in market competition, thus providing favorable conditions for enterprises to participate in the competition at home and abroad.”Jiangbin” brand piston has become a well-known brand in the industry, has been rated as the industry, provincial “famous brand products”.
2. Innovate core technologies to achieve high-end breakthroughs
The high-end market for auto parts has always been a competitive one.From the perspective of market profit, although high-end auto parts only account for 30% of the whole auto parts market at present, the profit greatly exceeds the total profit of middle and low-end products.Although China auto parts industry has been a breakthrough in high-end market, but foreign auto parts manufacturers, with its powerful economic and technical strength, mature products and production management experience, plus with multinational auto group formed a strategic alliance, occupied the main components for high-end market in China, the control of the high technology, high benefit product areas.But the domestic parts enterprises are “low-end dogfight” intensified, showing a “high-end loss” situation.
“Low-end chaos of Chinese auto parts industry” and “high-end loss” are the true portrayal of its position at the low end of the industrial chain, and the root cause of the current situation of Chinese auto parts industry lies in the lack of core technology of local enterprises, unable to show their “unique skills”.
Post time: Sep-23-2021