Insufficient investment in foreign-funded auto parts expansion for local companies
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Although the domestic auto car market has entered a period of steady growth in recent years, multinational auto parts and components companies have earned a lot. According to the data, multinational auto parts giants including Bosch, Valeo, TRW and ZF have achieved double-digit growth in their business growth in China last year.
“Mainly the growth of new businesses.†Chen Yudong, president of Bosch China, said that the business related to its own-brand auto companies has accounted for 66% of Bosch's 2012 business in China. In fact, with the upgrading of China's auto industry, automakers of their own brands have entered the period of transformation and upgrading. As local auto parts companies have not kept pace with the upgrade of auto brands, in the new round of competition, foreign auto parts companies It is gradually engulfing the sphere of influence of local auto parts companies.
In the past 10 years, Bosch has achieved a compound annual growth rate of 25% in China, of which only 2012 sales reached 41.7 billion yuan, accounting for 10% of its global sales. At present, China has become Bosch's second largest overseas market.
“The growth rate of TRW in China is much higher than the expectation in 1994.†Recently, the responsible person of TRW Company, the giant of automotive security product system development and supply, said that due to the rapid development of China's business, TRW will increase investment every year. In order to enable enterprises to enter the virtuous circle in the development of the Chinese market. Last year, the Chinese business already accounted for 15% of the company's global business.
The collective expansion into the expansion period also included French auto parts giant Valeo. Valeo's sales in China have exceeded 10 billion yuan last year, accounting for 10% of the company's global sales. It is expected that this figure will double by 2015, when China will become its largest overseas market.
Corresponding to high growth, multinational auto parts companies have entered a new round of investment peaks. TRW plans to invest over US$200 million in the Chinese market this year, exceeding TRW’s investment in any country in the world. Bosch also plans to continue to increase investment in the Chinese market. In 2013 alone, it plans to increase investment by about 3 billion yuan in automotive technology and aftermarket. ZF plans to re-launch two production bases in China this year.
“The double-digit growth of foreign-funded parts and components companies is generally due to the upgrading of China’s own-brand vehicles and the increasing number of models that have been developed globally,†said Chen Wenkai, CEO of Gasgoo.com. From the beginning, as a steam Roewe, it has positioned itself as a mid-to-high-end car. It has shared suppliers with Shanghai Volkswagen and Shanghai GM in the construction of its parts and components system; while the FAW Hongqi H7, which aims to develop a high-end official car market, has all its interiors. Johnson Controls is responsible for the design and development of two joint venture plants in Jilin Province.
With the help of China's consumption upgrades to the demand for foreign auto parts, foreign auto parts companies are actively developing low-cost products while continuing to expand into the low-end market while maintaining the original high-end product market. Last year, Valeo's orders in the Chinese market accounted for 18% of its total orders, while sales accounted for only 10% of the group's total sales, mainly due to its “lower price†in China and its development to satisfy China. The cost-effective products for self-owned brand car needs.
It is this strategy of multinational auto parts giants that makes their penetration rate in the Chinese auto industry higher and higher. It is understood that, at present, multinational auto parts companies control more than 90% of the core technology fields such as automotive electronics and engine parts, and the proportion of foreign capital in the areas of non-core parts such as automotive interiors and car lights is also increasing. Domestic auto parts companies that lack independent research and development capabilities and core technologies can only use their resources and cheap labor to gain market share.
As foreign auto parts companies have taken the lead in the scale in China, it is very difficult for local companies to catch up. According to industry insiders, if a certain technology is controlled by a multinational auto parts company, multinational auto parts companies will maintain high profits before there are no competitors, and once competitors enter, they will respond to the challenge by sharply cutting prices. In the future, local auto parts companies will take more of the roles of multinational auto parts companies in China as second-tier suppliers.
In response, Dong Jianping, deputy secretary-general of the China Association of Automobile Manufacturers, said that local auto parts companies have not made significant progress along with the blowout of the Chinese auto market. The key reason is that local auto parts companies do not pay attention to the input of technical forces. Enterprises see the development of automotive-related technologies too simple and easy, which is actually a misunderstanding of local auto parts companies in recognition.