How much of the $50 billion pie in the auto parts industry can Chinese companies eat?

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How much of the $50 billion pie in the auto parts industry can Chinese companies eat? [Copy link]

Recently, the "3rd China Changchun International Auto Parts Exhibition and Fair" closed in Changchun. As an important part of the exhibition, the first China-Europe Auto Parts Fair was also successfully completed. As this exhibition "emphasized both exhibition and negotiation", international auto giants also increased their purchases of parts from low-cost countries, thus attracting more than 1,000 companies to participate. However, judging from the contract signing situation of the exhibition, the situation is not very optimistic. The huge purchase orders have certainly brought opportunities, but also brought huge challenges to Chinese companies.

According to Long Zhuo, director of the International Exhibition Department of the Changchun Branch of the China Council for the Promotion of International Trade, during this China-Europe Auto Parts Fair, Chinese auto parts companies signed a total of 1.3 million US dollars in investment and procurement contracts with foreign companies. Among them, the French Adesian Exhibition Group and its subsidiaries, Aiheke Company and Taiwu Company, signed a 500,000 US dollar preliminary investment contract with Chinese companies such as FAW Fuao and FAW Sihuan; Canada's Ribair Company signed a 700,000 US dollar contract with Chinese companies. This number may be a large number for the organizer who held such an exhibition for the first time, but compared with the huge international parts procurement market, this number is not large. According to statistics from relevant departments, multinational companies plan to purchase $50 billion worth of parts in low-cost countries by the end of 2007, of which 70% are aimed at Chinese companies.

Hao Liyuan, an early manufacturing engineer at Changchun Fawer-Johnson Controls Automotive Trim Systems Co., Ltd., said that they mainly received some sporadic purchases, and not many large orders. "The market is definitely huge, the key is how much you can get." Jia Xinguang, chief analyst of the relevant industry branch of the China Automobile Association, said, "The United Nations also has huge orders every year, but how much can China get? The same is true

for parts. The international parts procurement market is huge, but it is difficult to say whether Chinese companies can meet the needs of international procurement." Jia Xinguang said that international parts procurement has very strict requirements on three points: quality, price and delivery time. On the surface, these requirements are simple, but in fact they are difficult to achieve. The quality requirements are actually the best in the world; the price is not the lowest but the most competitive; the delivery time is very strict, not 100,000 or 200,000 at once, but 100 today and 200 tomorrow, with different specifications and types, and timely delivery around the world, which has very high requirements for the logistics and distribution system. These three requirements are not met by many domestic enterprises at present.

At this exhibition, Bua from Alesund Company in France said that he brought huge orders, but he did not need a parts factory that produced a single product, but wanted to find a company with a high level of technology that could carry out integrated production and manufacture "modules". "If we can't find it, we will consider providing technical support to help Chinese companies build a factory in China."

According to statistics from relevant departments, in recent years, the joint ventures for parts have become wholly owned, and many international parts giants have adopted the method of directly setting up factories in China. In the first half of this year, multinational companies established more than 10 new production bases in China, and more than 90% of them were wholly owned enterprises. The transformation of joint ventures from equity participation to controlling shares, from joint ventures to wholly owned enterprises, and from occupying the market to monopolizing the market will lead to huge profits flowing into the pockets of multinational companies. "Therefore, Chinese companies cannot be blindly optimistic. Opportunities are fleeting and must be seized." Jia Xinguang said that if Chinese parts companies want to gain a place in the international market, they urgently need to expand and strengthen themselves. (Economic Reference News)