In the face of recent years, international multinational auto parts and components companies have entered China and have long been attached to vehicle companies. China's auto parts and components industry, which is obviously at a disadvantage in terms of capital, technology, management, and research and development, faces an unprecedented and severe challenge. Global procurement The simultaneous development of R&D, modular supply and the development of neutralization have become the four major bottlenecks facing China's auto parts industry.

In a recent in-depth investigation, a general point of view from the competent authorities and the auto parts industry is that China’s auto parts companies that cannot make breakthroughs in technology research and development in the short term have chosen to enter into a joint venture with international multinational auto parts and components group. In addition, there is no good policy and the development prospects of the entire industry are worrying.

The most important bottleneck faced by China's spare parts industry is R&D capability. Commissioner Jing Qi of the Industrial Development Division of the Hubei Provincial Development and Reform Commission stated that 291 auto parts enterprises above designated size in Hubei Province, only a few companies such as CATIC Technology have independent research and development capabilities, and the province’s auto parts R&D capability is basically zero. Due to the low level of research and development, there is no independent brand, and it can only imitate the production of other people's products. Most of the parts and components companies in China cannot adapt to the requirements of simultaneous research and development, and are not only difficult to support with new models, but also inevitably face the danger of losing the traditional market.

Followed by global procurement. In accordance with global procurement requirements, vehicle manufacturers must implement component procurement in accordance with the principles of QCDS or QCDD (Quality, Cost, Delivery, Service, or Technology). At present, China's auto parts industry has a low level of overall manufacturing, extensive management, and weak cost control. It cannot adapt to the global purchasing requirements of product quality, cost, and delivery date. Especially in terms of cost control, with the frequent implementation of the car price war, cost pressures are constantly shifting to parts and components, and the control cost capability of auto parts companies in China is facing enormous challenges. According to estimates by industry insiders, for every 10% reduction in vehicle prices, at least 5% will be passed on to parts and components companies.

The third is modular supply. Modular supply is a new management concept and business model brought about by global procurement. It imposes strict requirements on the production management level, assembly labor productivity, cost control capability, and electronic level of parts and components companies. At present, the gap between China's spare parts enterprises and foreign companies in this area is still very large, and they cannot keep up in the short term. Especially in terms of integration and electronicization, most of the parts and components companies in China can only produce primary labor-intensive products due to backward technology. The added value of the products is low, and it is difficult to implement second- and third-level equipment with complete vehicle companies. Enter the ranks of ancillary suppliers.

The fourth is the development of neutralization. Neutralization development requires that parts and components companies be separated from vehicle companies, no longer be affiliated with a complete vehicle group in the supply chain, and be market-based, independent, and stronger. For a long time, China's spare parts enterprises have been relying on the survival and development of state-owned complete vehicle and main engine plants, and the products are mainly used for supporting commercial vehicles. Neutralized development will inevitably break the traditional domestic component supporting system and supply and demand model, and products and markets are facing A new round of shuffles is a huge challenge.

In addition, the lack of capital investment, small scale of production, small quantities, and weak strength make it impossible for China’s auto parts companies to compete with international multinational parts companies. For a long time, due to the entire vehicle being in the seller’s market, China’s auto industry investment has focused on the expansion of the vehicle’s capabilities, and the investment in parts and components has been severely deficient; combined with the separation of blocks, self-contained systems, and closed development, China’s auto parts companies are small and scattered. The problem of abuse is prominent and the overall competitiveness is weak. Take Hubei Province as an example. There are 291 auto parts enterprises above designated size in the province. In 2003, the sales revenue increased by only two Wanxiang Group, not to mention the international multinational auto parts companies.

The domestic automotive industry figures, such as Vice President of Dongfeng Motor Co., Ltd. and General Manager of Parts and Components Department, believe that in order to meet the global procurement requirements, China's auto parts industry must get rid of the current market difficulties, only through the introduction of foreign companies through cross-border cooperation. Technology, capital, management, integration of resources, adjustment of product structure, improvement of technological R&D capabilities, adoption of a neutral development path, reversing the passive situation of parts and components lagging behind vehicle development for a long time, and full integration into global parts production and procurement chains; To seize the rapidly growing market opportunities for China's cars, strengthen and expand the overall strength and core competitiveness, and realize a leap-forward development of China's auto parts industry.

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