China should learn from the experience of emerging auto parts countries and seek development


In recent years, international multinational auto parts and components companies have entered China and have long been attached to vehicle companies. China's auto parts and components industry, which is obviously at a disadvantage, such as capital, technology, management, and research and development, is facing an unprecedented severe challenge. China’s auto parts and components have already had no choice but to stand on the world stage and compete with other developed and developing countries on the same stage. Stones from other hills, can learn. China can find useful lessons from developing countries and emerging countries and find inspiration for future development.

India: cost priority

At present, almost all global auto giants have purchased components in India, and the annual amount has exceeded 1 billion US dollars. The Indian Automobile Parts Manufacturers Association predicts that the country’s auto parts exports will reach 20 billion U.S. dollars within 20 years. The previous fiscal year (as of the end of March this year) has increased from 578 million U.S. dollars in the previous fiscal year to 800 million U.S. dollars, an increase of 38%.

The advantage of India's auto parts industry is its cost advantage. First of all, India's process technology can be applied to the reorganization of production processes, making the process more labor intensive and less capital intensive, thereby significantly reducing the overall cost of multinationals. For example, the “de-automated” production process used in Western factories can reduce the overall manufacturing cost of certain components by up to 20%.

In addition, India also reduces costs through design. For example, redesigning MarutiAlto's steering system can reduce its weight by 15%. Indian engineers can also quickly design products that help reduce development costs and delivery times. For example, an Indian supplier designed a steering system for an automobile manufacturer in just six months, and the manufacturer spent more than four years in other low-cost countries to jointly develop a similar system with a local supplier. . Many car manufacturers began to establish engineering and design centers in India to use local skills. U.S. General Motors set up a large-scale research center in Bangalore, employing 2,300 scientists, researchers and engineers. It is twice as many as the scientific research center in Shanghai and has become the company’s largest research center outside the United States.

In addition, Indian manufacturing workers have cheap wages and high quality, and manufacturing standards are among the highest in emerging countries. A person in charge of General Motors (India) said that the quality of auto parts in India is better than Mexico, China, and even South Korea, but the price is 15% cheaper than Mexico, 10% cheaper than South Korea, and China is quite. This is very attractive to the global automotive giants who are eager to reduce costs. In addition, Indian rubber, steel and other raw materials are not expensive.

South Korea: Balance of Prices

With the injection of overseas funds, South Korea’s auto parts manufacturing industry currently ranks among the top in Asia. In recent years, South Korea has become a world-renowned auto parts manufacturer. What kind of power is helping South Korea become a world-renowned auto parts manufacturer?

Experts in automotive manufacturing analysis of the Korean Institute of Industrial Economics and Trade (KIET) said that from 1997 to 1998, the Korean domestic economy was severely hit by the East Asian financial crisis, and small and medium-sized companies were on the verge of bankruptcy. At that time, a large number of foreign giants flooded into Korea, so a large number of companies in South Korea were controlled by foreign capital. With the support and assistance of foreign-funded enterprises, Korean SMEs have gradually emerged from difficulties and greatly improved the quality of their products. In contrast, Japan, the main competitor, has been unable to compete with Korean manufacturers because of its high cost. Although China has a relatively large price advantage in product prices, it is inferior to Korean components in component design and performance. Therefore, South Korea found a perfect balance between high quality and high prices in Japan and low quality and low prices in China.

Another major reason for the rapid development of the Korean auto parts industry is the recent strong performance of domestic automakers. The combined sales of the two manufacturers of Hyundai and Kia last year increased by a full 12% to 3.2 million vehicles, of which three-quarters of the vehicles were sold overseas. The two companies expect total sales to grow to 5 million by the end of 2010. With the backing of these Korean automakers, the auto parts manufacturing industry in the country can perform so well.

China: Concentration and Integration Are the Way Out

Learning from the experience of overseas auto parts industry development, concentration and integration will be one of the outlets for China's auto parts industry. For some important parts and components products, such as engines, the state can formulate entry barriers to prevent low-level duplication and excesses.

In addition, in the sales of parts and components, the state should encourage the establishment of parts and components sales consortium, establish a sales network including e-commerce, combine logistics companies, and form some large parts and components sales groups. Diesel engine parts have now been built into a diesel engine parts consortium, which has a certain role in promoting the development of the diesel engine parts market with price self-regulation and market orientation.

According to officials of the Economic and Trade Commission, the state will formulate new standards in a few years, integrate the total type of parts and components factories into 2 to 4, and others will divert to the second and third-tier supporting plants, and then develop labor-intensive components such as brakes. Discs, friction materials, etc., to address the employment of diversion personnel. As for those large batches, small amounts of bicycles, and complex technical standards, such as rubber gaskets no longer emphasize domestic, can be imported directly.




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