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China Automotive Parts Industry
China Knowledge Press, Oct 2003, Pages: 88
The rapid growth of China's automotive industry has led to the development of a significant automotive parts subsector as well. The Chinese auto parts industry is largely focused around the Yangtze River Delta, which accounted for 42% of total production in 2000. Within this region, Shanghai is the largest manufacturing center for auto parts with 25% of total production in 2000. Zhejiang and Jiangsu accounted for 10% and 7% of total production in 2000 respectively.
Following China's accession to the WTO in late 2001, the growth rates accelerated. To fulfil its ambition to become the main base of operations for leading foreign auto companies, China must establish a world-class automotive parts industry.
In doing so, the country would become even more attractive to leading automakers. Ready access to components would enable these firms to streamline their supply chains and purchasing operations while avoiding costly parts imports.
With an estimated value of RMB 175 billion (US$ 21 billion) in 2002, China’s automotive parts industry is large and poised for further high growth, buoyed by the rising fortunes of automobile manufacturers there. This industry is largely driven by four major multinational automotive parts companies (Delphi, Bosch, Visteon and Denso). Domestic players are relatively less skill-intensive, use simpler production techniques, and have somewhat inconsistent quality standards. These domestic parts companies are also financially weak thus resulting in a considerably lower investment in research and development facilities.
To become a leading center for auto parts production, it is vital to rectify these weaknesses by developing more sophisticated production techniques. The country should make products that are higher up the value chain (for example electronic fuel injection systems, airbags, central-locking systems and on-board Global Positioning Systems - GPS).
Local companies also should work more closely with their foreign counterparts, particularly in research and development and quality control. Examples of Sino-foreign joint-ventures include Shanghai Huizhong Automotive Manufacturing Co Ltd, Shanghai Automotive Co Ltd, United Automotive Electronic Systems Co Ltd, and Shanghai Yanfeng Johnson Controls Seating Co Ltd.
This market research report addresses issues of interest to investors, presents our main survey and research findings, and analyzes legal and production aspects. It concludes with a look at future developments in this key industry. A directory of useful contacts appears at the end.
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