The auto market has entered a period of stability, and foreign-funded parts and components companies have earned a lot in China. International auto parts giants, including Bosch , Valeo , TRW , and ZF , have achieved double-digit growth in their business growth in China in 2012.
"Mainly the growth of new businesses." Chen Yudong, president of Bosch China, analyzed that in its 2012 business, its own brand business accounted for 66% of Bosch's business in China. In fact, with the upgrading of the domestic auto industry, independent brands have entered the transition period. As the domestic parts and components companies have not kept pace with the upgrade of their own brands, in the new round of competition, the joint venture parts companies are gradually engulfing the sphere of influence of the original components.
“The growth rate of TRW in China is much higher than that expected in 1994.†A few days ago, John Plant, TRW Chairman, President and CEO of TRW Automotive, told reporters that due to the rapid development of China's business, TRW will invest additional funds every year. In order to enable enterprises to enter the virtuous circle in the development of the Chinese market. In 2012, the Chinese business already accounted for 15% of the company's global business.
Bosch and Valeo are also included in the collective expansion period. According to report, in the past ten years, Bosch has achieved a compound annual growth rate of 25% in China, of which only Bosch's combined sales in China reached 41.7 billion yuan in 2012, which accounted for 10% of its global sales. Now, China has become Bosch's second largest overseas market.
Valeo's performance is also not inferior. In 2012, Valeo's sales in China have exceeded 10 billion yuan, accounting for 10% of the Group's sales. The company expects this number to double by 2015, when China will become its largest overseas market.
Corresponding to high growth, multinational component companies have entered a new round of investment peaks. TRW plans to invest more than US$200 million in the Chinese market this year, exceeding TRW’s investment in any country in the world. Bosch also 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. ZF plans to re-launch two production bases in China in 2013.
“The double-digit growth of foreign-funded parts and components companies is generally due to the upgrade of China’s own brand products, and more and more models have been developed simultaneously with the world,†said an industry source. From the beginning, as a steam Roewe, it has positioned itself as a mid-to-high-end car. It has shared suppliers with Shanghai Volkswagen and Shanghai GM in the construction of its parts and components system; while the FAW Hongqi H7, which aims to develop a high-end official car market, has all its interiors. Johnson Controls is responsible for the design and development of two joint venture plants in Changchun, Jilin.
With the help of China's consumption upgrades, foreign-funded parts and components companies are actively developing low-cost products while continuing to expand into the low-end market while maintaining the existing high-end product market. An obvious example is that Valeo's orders for the Chinese market accounted for 18% of its total orders in 2012, while sales accounted for only 10% of the group's total sales. The main reason behind this was its "lowness in China. "Value", developed a cost-effective product to meet the needs of China's own brand.
It is this strategy of foreign-owned parts giants that has made its penetration rate in the automotive industry in China higher and higher. According to report, foreign-invested parts and components companies are not only in the high-tech and core technologies, such as automotive electronics and engine parts and other key areas, controlling more than 90% of the share, automotive interiors, car lights and other non-core parts and components, foreign-funded The proportion has further increased during this round of growth. However, Chinese auto parts companies that lack independent research and development capabilities and core technologies can only use their resources and cheap labor to gain market share.
In fact, due to the fact that foreign-funded parts companies have taken the lead in domestic scale, it is very difficult for domestic companies to catch up. An independent brand company executive told reporters that if a certain technology is controlled by foreign capital, foreign parts companies will maintain high profits before they have competitors, and once competitors enter, they have already earned high profits and Parts suppliers with economies of scale are responding to challenges through significant price reductions.
In interviews with reporters, most foreign suppliers of parts and components have to admit 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.
Dong Jianping, deputy secretary-general of the China Association of Automobile Manufacturers, commented: “The domestic parts and components companies have not made significant progress along with the blowout of the Chinese auto market. The key reason is that local auto parts companies do not pay attention to the input of technical forces. Enterprises have seen the development of automotive-related technologies too simple and easy. This is actually a misunderstanding in the understanding of local auto parts companies."
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