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For the first time, Chinese automotive electronics manufacturers have made substantial breakthroughs in the automotive front-end market.
On August 23, the first domestic car with domestically-made electronic control system products went offline in Chongqing. He Jianjun, the vice president of the supplier Konka Group, said that the company's automotive EFI system will be put into mass production and sales, the first batch of Dongfeng Group's "off" mini-car.
Previously, Chinese automotive electronics manufacturers could only provide automotive audio products, car DVDs, and other products to the automotive manufacturers in the automotive front-end market. No manufacturer can cut into the category of automotive core components.
In the back-end market, where automobile refitting and automobile maintenance are the mainstays, the competition status is far away from the front-end market. The market share competition is mainly between domestic companies with cost advantages and local advantages. The main reason is that the entry threshold is low. Technology has become more and more open, but companies are also facing the risk of “a move that is not careful and will be lost in a rowâ€.
Front end: preemptive
Chang Jing, general manager of Konka Automotive’s electronics division, said that in the automotive industry, the engine is called the “heart†of the car, and the EFI system is the key component that guarantees the normal operation of the heart.
EFI control technology has a high technical threshold and strict access restrictions. For a long time, technology and the market have been monopolized by Bosch, Delphi, Motorola and other international automotive electronics giants.
On the 25th anniversary of the group’s founding last year, Konka Group’s president Hou Songrong stated that automotive electronics will become the third largest strategic industry behind color TV sets and mobile phones, and will directly cut into the engine control system and launch challenges at “high-end brands†at the high end.
To this end, Konka made preparations for three years. In 2002, Chang Jing, the original Motorola automotive electronics strategy manager, was responsible for the automotive electronics division. Under the leadership of Chang Jing, Konka began to recruit talents on a global scale. In more than two years, dozens of top engineering and technical talents from internationally renowned automotive electronics companies such as Motorola, Aihua, Bosch and Thomson have been brought together in Konka. The team analyzed and studied the advantages of foreign automotive EFI control systems, and at the same time based on the actual design and development of the Chinese market. After two years, it independently developed an EFI system for automotive engines that is more suitable for the needs of the Chinese market.
However, to turn a laboratory sample into a key component in the engine of an automobile factory, it must also pass the tests of the national testing department and the vehicle manufacturer, otherwise the product will not be approved for use. According to sources from the Konka Group, the Group’s investment in automotive electronics will cost an average of several million yuan in two or three days.
At the beginning of 2005, Konka's automotive EFI control system passed the inspection of the designated testing agency of the country, and Konka subsequently signed a cooperative development agreement with several customers.
Zhu Jiang, Senior Technical Manager of Konka Electronic Control Systems, revealed that the cooperation between Konka and Dongfeng began in 2005. After passing the national inspection, Konka signed a development agreement with Dongfeng, and provided the test engine and engineering prototype from the “Dongfeng Xiaokang†mini-vehicle production plant in Chongqing Pan’an Huaihai. Konka is responsible for the development and calibration of the electronic control system for assembly. Test work.
In 2005, Konka first carried out the engine rig calibration test. As a result, the performance indicators of the engine equipped with the Konka “AE06†EFI management system all met the target requirements. In the 10 months since then, Konka has conducted driving performance tests and extreme environmental tests in different road conditions and in certain regions. Vehicles equipped with Konka Model AE060 car EFI systems have successfully started one time – Konka EFI control system After undergoing a severe test of success, the company received the "life permit" that entered the market first.
"The joint development of the Konka Automotive EFI control system products and other customers is also in the testing process and it is expected that several customers' vehicles will successively complete R&D calibration and matching work in December this year and next June." said Zhu Jiang.
According to Chang Jing, as of now, there are already seven domestic automobile manufacturers and Konka reaching a technology development agreement and cooperation agreement. Two of them are joint ventures established by foreign automobile companies in China and will provide electricity to them within this month. Spray system products.
Why can Konka be successful in the core of the engine soon? Chang Jing believes that, in addition to the international R&D team, the main reason is that Konka's localization advantage enables it to provide system services for automakers. “The number of domestic automakers is huge and the product diversification is strong. This is the biggest headache for developers of EFI systems. At the same time, the verification cycle of the software and hardware of EFI products is long and the cost is high. This has long plagued domestic automobile production. The prominent contradiction between business and system developers."
In terms of costs, Konka's EFI system also has significant advantages. “At present, the suppliers of EFI systems in China are all international big brand companies, which are relatively high compared with domestic companies. Konka Automotive Electronics fully relies on local development. Secondly, the key component of Konka's EFI system is Konka. Independent products, some of the key components imported from abroad through the Konka brand's influence to get a satisfactory price, compared with other system suppliers, Konka has the cost advantage of components composition.†Chang Jing said.
Backend: Wang Qichang
Compared with Konka's breakthrough in the automotive electronics front-end market, due to the large number of entrants, automotive electronics manufacturers in the back-end market continue to compete for this share of the competition, manufacturers in various market segments are always on the thin ice.
Due to the lack of working capital, Lin Jin (a pseudonym) had to dismiss the employee in October 2005 and shut down the company he had only opened for half a year. His company mainly manufactures and sells an automotive fault diagnosis computer for use by car owners. "As long as this product can be connected to the car's electronic control system, it can quickly check if the car is faulty within one minute. Faults, how to solve.†Lin Jin said that at the time there are manufacturers in the country to produce similar products, but most are provided to the car maintenance plant to use, one or two have also developed a personal product, but later discontinued.
Lin Jin believes that manufacturers do not use personal computer products. They only consider that this product is in conflict with the products provided to the repair factory. If professional production and sales are conducted, it can be differentiated to occupy this market. Later, Lin Jin together with friends raised funds to set up the company. Around May 2005, Lin Jin hired a well-known domestic marketing and communication agency to do investment planning.
“Not long after the announcement of the advertisement, investors including the Hong Kong consortium have discussed strategic cooperation with us. However, they all hope to obtain a controlling stake. I thought at that time that the product market had a good response. Even if it were to be sold, it should not be this. It's time to sell.†Lin Jin said. Since then, in terms of market operations, Lin and shareholders have diverged, adjusted the early-stage market strategy, and invested large sums of money to rebuild. "While the market is interested in the product, several shareholders have no money to continue investing and the original intention investors have lost interest."
In the same industry, Yuanzheng Science and Technology Co., Ltd. is in the leading position in the field of automobile fault diagnosis equipment. In the peak period of 2002 and 2003, the company's diagnostic instrument once occupied about 65% of the domestic market share. In the second half of 2003, Yuanzheng Science and Technology invested tens of millions of yuan in capital and established new business units such as tools, cleaning equipment, testing equipment, automotive electronics, and inspection lines at a stretch.
This over-inflated expansion quickly led to bitter consequences. "The automotive electronics division's main in-car DVD was thought to be as simple as producing home DVDs. It wasn't that it was discovered after other products came out on the car. How many units will be returned will be returned to Taiwan," said the former head of sales of the Automotive Technology Division of Lucent Technologies.
In other cases, such as the testing equipment and the testing line, the new business units rely entirely on the profitability of the diagnostic equipment business unit to “transmit bloodâ€. In July 2004, Yuanzheng Science and Technology held a global sales summit after the automotive electronics and testing. Lines, testing and other business units were forced to withdraw.
Liu Yizhi, chairman of Lund Technology, frankly stated that “In the aspect of enterprise development, Yuanzheng has taken a turn for the better, and the judgment of some projects is overly optimistic.†However, he said that the Chinese auto market is still growing at a high speed, new models are increasing, and the diagnosis and maintenance of vehicle maintenance is increasing. The related products will still bring huge profits to the company. In the future, Lanzheng Technology will be cautious in diversification.
According to Roland Berger's report, the sales volume of China's auto market in 2005 reached 1 trillion yuan. According to the current 12% of the proportion of automobile services, the scale of China's auto service market in 2005 is 120 billion yuan, and it is estimated that it will reach 200 billion yuan in 2010.