Foreign-funded part-sales companies quickly infiltrate local companies from high to low

In recent days, the rapid development of foreign-invested parts and components in China has aroused the attention of the industry. In China, from the previous high-margin key spare parts market to the low-end market expansion, it has already lost the key high-end parts and components market. The pressure from local OEMs feels pressured.

In the past, the technology was inferior to others, and it was also able to survive in the low-tech parts market with its price advantage. Nowadays, more and more foreign-invested parts and components companies are operating in large scale in China. Their technological and profitable advantages have gradually eliminated the competitive advantages of Chinese local parts suppliers. If even this position is eroded, China’s spare parts How will you stand?

Foreign spare parts: fierce expansion

Last year, the international auto parts giants including Bosch , Valeo, TRW, and ZF , all achieved growth rates in double digits in China.

Corresponding to high growth, multinational component companies have entered a new round of investment peaks. According to news reports, foreign auto parts manufacturers are now in full swing to accelerate the planning and implementation of investment and capital increase projects in China.

Bosch 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. TRW also plans to invest more than 200 million U.S. dollars in the Chinese market this year, which exceeds TRW's investment in any country in the world. ZF plans to re-launch two production bases in China this year.

In addition to increasing investment, with the help of China’s consumption upgrades, foreign-funded parts and components companies are actively developing low-cost products and expanding into low-end and middle-end markets while maintaining the existing high-end product market.

Dong Jianping, deputy secretary-general of the China Association of Automobile Manufacturers, stated that foreign auto parts companies with technological, management, and brand advantages have benefited greatly from the technological upgrading of the auto parts industry in China, and have continued to expand with the auto parts companies in China. The technological gap is accelerating its investment in the Chinese market.

Local components: in danger

At present, in China's auto parts industry, as long as it involves safety, environmental protection regulations and high technical requirements of the parts market, such as EFI, high pressure common rail, automotive electronics, are basically controlled by foreign-funded parts enterprises. According to statistics, about 80% of domestic auto technology patents are utility model patents, and there are few invention patents. The core technologies are not mastered.

At present, there are more than 5,000 non-state-owned auto parts companies with state-owned, state-controlled and sales revenues of over 5 million yuan, of which more than 80% have annual sales of less than 100 million yuan, and only 130 have exceeded 100 million yuan. Nearly 70% of auto parts companies have high production costs, low overall efficiency, and uneven product quality.

Among the top 100 parts and components enterprises in China, the companies that occupy a considerable portion are Sino-foreign joint ventures based on foreign technology. Parts companies that are wholly Chinese or Chinese companies with full control and possess core technologies can be said to be rare.

Most foreign suppliers of spare parts admitted that in the future, China's local parts suppliers will be more responsible for the role of foreign suppliers of secondary parts and components in China. Foreign brands currently occupy more than 65% of the market share. The so-called market competition is actually the competition of joint venture brands and international brands in China.

How to save yourself?

Can local resellers fail to stand up? the answer is negative.

In foreign countries, Germany has giants such as Bosch, China, ZF, BASF, ThyssenKrupp, etc. In addition, there are many small and medium-sized enterprises, especially those that are private, highly innovative and professional , Together with giants such as Bosch, they have formed a powerful component system in Germany and become a solid foundation for supporting the entire automotive industry. This has made Chinese parts companies see hope. However, self-rescue must first of all have a thorough understanding of their own weaknesses, prescribe the right medicine, can be cured.

First of all, the lack of accumulation of core technologies remains a lingering disadvantage for local auto parts companies. Second, weaker quality control capability is also a serious injury to local auto parts companies. There is a clear gap between this and foreign parts and components companies.

It is undeniable that at present, a large proportion of domestic auto parts enterprises rely on the unique advantage of low labor cost, but they are constrained by the low level of quality of workers and lack of scientific system management in the production process. The quality control of the process is not in place, resulting in a high rate of defective products and severe rework. At the same time, the theoretical understanding of the production line is not in place. There are many unreasonable phenomena in the design and staffing of the production line.

The lack of experience and opportunities for simultaneous development with OEMs, weak brand influence, and outdated corporate management models have left local auto parts companies lacking sufficient competitiveness to compete with foreign-owned parts and components companies.

Insiders pointed out that China's parts and components companies want to become bigger and stronger, we must first be positioned as the world's products, the world's brands, rather than the country's products and brands; Second, we must continue to innovate and continue to operate. In addition to talents, knowledge, experience, and management, all aspects need to be accumulated. Without this accumulation, it is very difficult to create a global brand and global product. In addition, innovation must strive for excellence, quality and cost need to be improved, and have solid management and efficient management capabilities. Only in this way can Chinese parts and components create the world brand.  

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