As China has become the world's largest auto market, the global multinational auto parts companies have increased their investment in the Chinese market. Foreign auto parts companies rely on their advantages in technology, management, and existing customer relationships in the Chinese auto market. Outstanding performance, especially in the field of high-tech is still occupying an absolute dominant position.
Although there are many local parts and components companies in China, they are mainly concentrated in areas where the added value of products is low. In the process of rapid growth of the domestic auto market, China’s parts and components industry will also face tremendous changes in the future, and Beijing Pacific Century Automotive Systems Co., Ltd. (“PCMâ€) just acquired General Motors global steering and transmission business on July 13th. The previous Jingxi Heavy Industries acquisition of the United States Delphi shock absorbers and brake division, Geely's acquisition of Australia DSI, Wanxiang acquisition of the United States DS and a series of overseas acquisitions, may start this transition.
Foreign investment control market
According to statistics, foreign-owned and joint venture companies in the EMS engine control system, airbags, ABS systems, catalytic converters, electric sunroof, air conditioning systems, car seat assembly, electric window regulators, lighting systems, automatic transmissions, high pressure For fuel pumps and other systems and components, they basically controlled more than 70% of the market share, and almost all products were monopolized by foreign capital.
There are three main reasons for this situation: First, foreign multinational auto parts companies have strong simultaneous development capabilities, experience data accumulation, and large amounts of R&D capital investment in these auto parts and components. Relatively speaking, the vast majority of Chinese auto parts companies lack the capability for simultaneous development, but only have the ability to develop by prototype or develop according to drawings, and the gap in the high-tech field is even greater.
Second, China's domestic spare parts companies lack the opportunity to develop simultaneously with vehicle companies. Passenger cars account for more and more high proportion of motor vehicles. In the passenger car market, the development of new models of foreign-funded enterprises is almost entirely carried out abroad. Therefore, the cross-border parts and components companies naturally occupy the opportunity for simultaneous development of new foreign cars. . However, Chinese self-owned brand auto companies are developing very little. Even if there are positively developed models, these high-tech parts and components also tend to allow foreign parts companies to provide technology to ensure the quality of new vehicles.
Finally, it is also related to the current overall positioning of local Chinese parts and components companies. At this stage, the overall characteristics of China's domestic auto parts companies tend to occupy products with relatively low technological content and technical inputs and can show superiority in cost control, such as brakes, wheels, etc., and gradually increase the technology content later. Product development.
Missing core technology
The data shows that there are about 20,000 local parts and components companies in China, accounting for more than 80% of the total number of parts and components companies, but the sales of local parts and components companies account for only 20% of total sales, and 90% of products are concentrated in the low-end product. Although the index of the total domestic auto parts industry is continuously increasing, and the number of product exports is also growing rapidly, the development of local parts enterprises still lags far behind that of foreign-funded enterprises. Production is only concentrated on low value-added and low-tech content. On the other hand, with high energy-consuming labor-intensive products, profitability is clearly insufficient.
The lagging development of core technologies, especially the development of key components, is a fundamental issue that restricts the development of China's auto industry. At present, parts and components companies in the automotive industry in China have already established a certain supporting scale in terms of traditional, low-value-added components, but high-tech and high-value-added components, especially electronic technology components, such as air-conditioning, electric steering, Electronic brakes, suspension systems, and engine controls are still basically controlled by wholly foreign-owned enterprises or joint ventures.
For a long time, foreign-funded enterprises have not only mastered the core technologies of some key component products, but also monopolized the market for providing complete components for automakers. At the same time, the system they have built in China, from development and training to production and sales, has also taken shape, and they have begun to integrate their investment companies in China according to the best division of labor and layout. The current situation has also accelerated the expansion of foreign-invested parts and components companies in China: According to data from relevant foreign institutions, the profitability of global auto parts suppliers has dropped significantly in 2009 due to the financial crisis, and emerging markets have performed well. This is the hope for their growth. In this context, from the fourth quarter of 2008 to now, well-known parts and components companies such as BorgWarner and Johnson Controls have established new wholly-owned or joint venture factories in China.
It is not easy for domestic companies to take a place in key components. Only by strengthening the research on the basis of new technologies and innovation, and relying on basic research to break the technological blockade and patent barriers, can the domestic auto parts industry continue to develop.
Overseas acquisition breaks
On July 13, 2010, PCM signed a contract with U.S. General Motors in Detroit to acquire GM's NEXTEER company, a global global steering and transmission business. This is another major overseas acquisition of the Chinese auto parts industry following the acquisition of Delphi by US$100 million from Jingxi Heavy Industry last year. The acquisition amounted to US$450 million, making it the largest overseas acquisition to date.
It is reported that this transaction will be directly acquired by PCM and 100% of NEXTEER's equity owned by General Motors will be completed in the fourth quarter. By then, PCM will have the universal NEXTEER world's most advanced steering and transmission technology, industry experience and global customers. Resources have become the world's top supplier of steering and transmission systems, laying a solid foundation for Beijing's auto parts industry to enter the high-end international market, and will also have a profound impact on the development of China's auto parts industry.
China’s automobile industry revitalization plan mentioned that “the key parts and components technologies will be autonomizedâ€, and the state will also invest 10 billion yuan in the next three years as a special fund for technological transformation and technological upgrading of automotive companies. With the promotion of policies and market enticement, more and more Chinese parts and components companies regard Bargain-hunting Overseas as the best way to acquire core technologies.
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