Why Parts Become a Pain in China's Auto Industry

The auto parts industry is a very important part of the automotive industry chain. In the value chain of the global auto industry, auto parts value has accounted for 50% of the total value. "If the parts are strong, the automobile industry will be strong; if the parts and components are weak, the automobile industry will be weak." However, it is a fact that is extremely painful. After China jumped into a global production and sales country, the Chinese auto parts and components industry was still very fragile. Parts, why became the pain of the Chinese auto industry? Where did the problem appear? How can we strengthen the auto parts industry? For this reason we have planned a series of reports, so stay tuned.

Shanghai Automotive Braking System Co., Ltd. (SABS) was jointly established in 1994 by SAIC's subsidiary HASCO and Continental AG. Joint venture. From its establishment in 1994 to around 2000, SABS has long dominated the market for passenger car brakes in China and has a significant influence on the Chinese auto parts industry.

But four years ago, such a good day was over. Because Continental AG has newly established a wholly owned subsidiary, Continental Automotive (Japan), 5 km away from the company to produce automotive electronic braking systems with a relatively high technological content; while SABS's products are made from hydraulics. With the full range of electronics becoming a purely hydraulic brake system today, SABS's senior technicians have switched to the CAC. The past scene of SABS is no longer what it used to be. In 2010, SABS achieved sales revenue of only 2.7 billion yuan, while the CAC is on the rise.

Cases like this one are not uncommon in the automotive industry in China. Since the reform and opening up, it should be said that China's auto parts industry has developed rapidly. In 2010, the annual production value reached 1.6 trillion yuan. At present, there are about 30,000 auto parts enterprises in the country, and it is already available to provide more than 18 million cars, more than 24 million motorcycles, and more than 70 million cars and more than 110 million motorcycles for the society. Maintenance service capabilities.

“However, an unavoidable reality is that China's auto parts enterprises are not only small in size, but have a low degree of concentration in the industry, and most of them rely on low-cost and vicious competition, leading to chaotic markets and unacceptable levels of industry.” Li Kaiguo said bluntly, "This has become a pain in the development of China's auto industry."

Recently, "Automotive News" announced the top 100 auto parts suppliers in 2010, with 30 companies, 28 companies, and 17 companies in the United States, Japan and Germany respectively, accounting for 75% of the total. The other 25 countries are divided by 10 countries including France, South Korea, Canada and Sweden. Among them, South Korean companies are the most eye-catching, and there are already four companies in the list. As China, the world’s largest auto market, there is no auto parts company.

In fact, it has been a long time for Chinese companies to be absent from the list of the top 100 auto parts supplier suppliers in the world. Bosch in Germany ranked first in the list with sales revenue of 47.3 billion euros in 2010, accounting for more than a quarter of China's entire auto parts market in 2010, exceeding the sales revenue of all auto parts auto parts in 2010 with. However, the sales revenue of Wanxiang Group, the largest auto parts company in China, was only US$3.3 billion in 2010. There is still a big gap between the Swedish company SKF Automotive, which is the last one on the list.

The reporter saw at the Auto Parts Expo that, compared with foreign parts and components companies, more than 1,000 auto parts companies in China not only have small booths, but also exhibit products that are relatively low-end, with low technical content and brand awareness.

Without independent technology and brand, it is difficult to have market competitiveness. According to data from the Ministry of Commerce, foreign investment currently controls most of the market share of auto parts, domestic sales of parts and components only account for 20% to 25% of the total industry, auto parts manufacturers with foreign backgrounds account for the entire industry 75 More than %, of these foreign suppliers, wholly-owned enterprises accounted for 55%, Sino-foreign joint ventures accounted for 45%, and local parts and components were mainly supported by self-owned brands, which had a low market share. Especially in high-tech areas such as automotive electronics and engine parts, the foreign market share is as high as 90%, among which the output of key components such as automotive EFI systems, engine management systems, ABS and airbags, and automatic transmissions, etc. The proportions were 100%, 100%, 91%, and 69% respectively.

Compared with the import and export of complete vehicles, the import and export of auto parts has been in a surplus, and to a certain extent, it has made up for the deficit in the import and export of vehicles. In 2010, China’s auto parts exports reached US$ 40.584 billion, accounting for 78% of total auto exports. “In fact, foreign-funded enterprises are still the dominant players in this market.” Taking exports as an example, Guo Tong, deputy director of the China Automotive Strategic Development Research Center at Tianjin University, gave a set of data: From the number of auto parts export companies Look, the self-owned brand companies, joint ventures, and wholly-owned enterprises each account for 50%. From the perspective of the quantity and composition of export products, exports of joint ventures and wholly-owned parts and components accounted for 30% of the total exports of parts and components, and exports accounted for 70% of the total exports of parts and components. The vast majority were high-end products. The export volume of self-owned brand enterprises accounted for 70% of the total export volume, and the export volume accounted for 30% of the total export value of spare parts. The vast majority were low-end and mid-range products. From the perspective of export regions, parts and components of joint ventures and wholly-owned enterprises are mainly exported to the OEM market, and self-owned brand enterprises are mainly exported to the aftermarket.

The “high, low, and high consumption” of “high pollution, low technology, consumables, energy consumption, manpower, and energy consumption” is still the main feature of China’s auto parts export products. Fu Yuwu, executive vice president and secretary-general of the China Automotive Engineering Society, said that the above structural imbalance indicates that resources and cheap labor are still the main advantages of China’s own brand components in the international market. Due to lack of independent research and development capabilities and core competitiveness, China Self-owned brand auto parts have not fully entered the global supply chain.

The problem is that the development of China's spare parts industry has already constrained the development of the vehicle. "The self-owned brand auto companies will have very low profit margins if they don't master the core parts and components technology," said Shen Jun, vice president of Greater China at Roland Berger International Management Consulting (Shanghai) Co., Ltd., "We have done a statistic, Currently, the sales volume of self-owned brands in the Chinese market is roughly one-third, but the share of sales accounts for 20%, which is less than 10%. What are the reasons? There are more low-end models and very few high-end models. If you look at profits again Contribution, only 10% of the contribution, 90% are international brands, it means that although the independent brand to obtain one-third of the market share, but only one-tenth of profit acquisition, to a large extent affect the sustainable development of independent brands This is related to the weakness of the parts industry."

What is more serious is that in the parts and components industry, as foreign investment has not yet entered into restrictions, since the beginning of 2006, multinational corporations have become increasingly dominant in the production of auto parts in China, and their monopolistic behavior has gradually become “dominant” as “dominant”. ". Nowadays, in order to keep a close eye on core technologies, more and more foreign capitals are adopting the form of sole proprietorship when they enter China's auto parts production field. Obviously, this is not a good signal.