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Although auto parts and components are not the protagonists at the Beijing International Auto Show, their position in the Chinese auto industry is increasingly important.
2006 is of great significance to China's auto parts industry. On July 1st, the average tariff of China's autos dropped to 25% and the tariffs for parts and components dropped to 10%. China's spare parts industry has entered a transitional period after its accession to the WTO and is facing a more severe test of competition. At the same time, the "Eleventh Five-Year Plan" for China's auto parts special development plan is about to come out, the national "Eleventh Five-Year Plan" proposed comprehensively enhance the auto parts industry competitiveness of the development position has begun.
Future market profit growth point
Since 2000, the proportion of China's spare parts industry in the entire automotive industry has increased year by year. In 2005, the domestic auto parts industry realized a total industrial output value of 383.8 billion yuan, accounting for 35% of the total output value of the entire automobile industry, of which the total export value reached 8.5 billion US dollars, and the OEM output value was estimated at 268.1 billion yuan. From January to September this year, the industrial output value of the parts and components industry was 335.773 billion yuan, of which the export value reached 8.4 billion US dollars and the OEM output value was estimated at 255.1 billion yuan. According to Shen Ningwu, deputy secretary-general of the China Association of Automobile Manufacturers, the "Eleventh Five-Year Plan" for China's auto parts development plan is being formulated. The output value target for the "Eleventh Five-Year Plan" is to reach 1.3 trillion yuan in total auto parts output by 2010. Among them, the output value of OEM is 730 billion yuan, and exports are expected to reach 40 billion US dollars.
In terms of profitability, compared with the continuous decline in the profits of the entire vehicle industry, the parts and components industry has maintained a profit margin higher than the average level of the automotive industry. According to statistics, in 2005 China's auto industry's profit margin was 5%, while the parts and components industry was 6%.
This attractive market attracted foreign investment. Delphi has invested more than US$500 million in China, invested in R&D centers, training centers, and 15 companies with sales of US$1 billion; Bosch invested more than US$600 million in China and established 10 representative offices in China. 5 Home trading company, 18 companies with sales of 1.4 billion euros...
The internationally renowned parts and components group has stepped up efforts to invest in the domestic parts and components industry, and has formed a system from the entire process of development, training, production, and sales, and has begun to integrate enterprises that invest in China according to the best division of labor and layout. From the change of shareholdings to holdings, from joint ventures to sole proprietorships, and from taking market to monopoly markets, the form of foreign investment in Chinese joint ventures is quietly changing.
After nearly 10 years of development, the proportion of China's spare parts industry in the automotive industry has been increasing year by year, and the level of manufacturing has increased significantly. Some companies already have the ability to independently develop and supply systems, and have achieved a complete component system for commercial vehicles. Supports the level of general parts systems for cars. However, the proportion of the parts and components industry in the automotive industry is 35% to 36%, which is still lower than the international level of 60% to 70%.
Looking for ways to improve internal strength
In 2004 and 2005, the China Association of Automobile Manufacturers and the Department of Industrial Transport Statistics of the National Bureau of Statistics released the “China Top 100 Parts†for two consecutive years. The difference is that in 2005, wholly foreign-owned enterprises were also included in the top 100 rankings.
In this regard, Shen Ningwu proposed that the development of China's spare parts industry will begin with facing the pressure of foreign capital competition and face up to the gap between China and foreign countries. Statistics of "China's Top 100 Automobile Parts in 2005" show that there are 54 top-ten Chinese and foreign-invested enterprises, and most of them are ranked top. At the same time, the control of foreign companies on the core technologies of some key parts and the monopoly of prices will continue for quite some time.
China’s auto parts and components are currently basically a fully open market, and the future parts and components industry will also be a large international portfolio. The only way of development is to address the gap. Countries, industries, and enterprises play their respective roles, form joint forces, take the initiative to participate in reorganization, and enhance overall competitiveness.
First of all, we must promote industry restructuring and mergers and acquisitions. Compared with the entire vehicle industry, the integration of parts and components industry is relatively slow. The ability of domestic parts and components companies to integrate is relatively weak, coupled with the fierce market competition has not yet reached the height of your life and death. The time has not yet come for the market to fully restructure and merge. The state and industry should make use of this stage, step up the integration within the industry, and prepare in advance for the restructuring of the entire industry.
Second, increase investment in research and development to improve the level of technology, especially the research and development capabilities of key components. The core technology of China's car main assembly and key components is still controlled by foreign parties. Domestic parts and components companies generally lack independent research and development capabilities and R&D facilities. The annual investment in business development is generally about 1% to 1.5% of sales revenue, compared with 3% to 5% or even 10% in developed countries. The investment in the parts and components industry should be 1.2-1.5 times that of the entire vehicle company, while China's investment is only 0.3 times or less. In the face of weak corporate independent research and development capabilities, Shen Ningwu suggested that we can draw on the experience of the entire vehicle industry to raise funds from the state, establish 2 to 3 national R&D centers for key auto parts and components, and concentrate on R&D through paid services. The results are shared by the industry.
Third, make full use of the vehicle industry to vigorously develop its own brands and opportunities for independent innovation, and more involved in the simultaneous development of complete vehicle companies to enhance the innovation capabilities of component companies.
Hold a grip on the export market
From the 6.13 billion U.S. dollars in 2004 to the 8.5 billion U.S. dollars in 2005, the sustained and rapid growth of China's auto parts exports has been an indisputable fact. The export market is also expected to be good. According to relevant data, by 2010, the total trade volume of world auto products will reach 1.2 trillion US dollars, and the auto parts giant will accumulate up to 50 billion U.S. dollars in spare parts purchases in low-cost countries by 2007. 70% of them plan to target China.
The situation looks rather optimistic, but Shen Ningwu reminds that the parts and components industry must not only pursue this superb scenery. The number has grown rapidly, but the technology content of products is low, the added value of exports is low, and the proportion of OEMs in the market is low. This situation of “a fast and three low†attracts people's attention. The current problems in the export of auto parts and components are still mainly low-value-added products, mainly raw material consumable products, mainly in the after-sales market, and the export pattern where individuals are mainly looking for orders.
According to the China National Automobile Manufacturers Association’s “Eleventh Five-Year Plan†special parts plan, the target for parts exports by 2010 is 35 billion to 40 billion US dollars. The increase in exports after 2008 will be 10 billion U.S. dollars, which must be achieved by entering the global procurement system and a stable OEM market.
The "Eleventh Five-Year Plan" period will be the golden period for the development of China's auto parts industry. Shen Ningwu hopes that China's spare parts industry will seize the opportunity of the country's strategic opportunity to support independent innovation and the opportunity for the transfer of the international auto industry, and make necessary strategic adjustments to promote it. The industrial structure, product structure optimization and upgrading, and development capabilities have been improved, and a complete auto parts industrial support system has been established.