In 2003, China imported 6.2 billion U.S. auto parts, equivalent to 30% of China's entire spare parts market. In 2003, the newly-listed car Z% was a global procurement of KD parts. In a sense, it was only a theory. Foreign automakers Bringing its own supplier partners to China

Domestic auto parts companies are pushing down the price of each other, and the loss of internal forces After the foreign party has mastered the sales right of the joint venture, it is trying to grasp the procurement right. The Chinese can neither control the market nor control the cost. The 8th Beijing International Auto Show is over, to participate in this exhibition , car manufacturers can be described as spare. The purpose is to deepen the company's impression in the minds of consumers so as to attract more potential users to purchase the company's products. In addition, the media is making a big splash and the auto industry has a thriving scene. However, at the first annual meeting of Chinese part-owners entrepreneurs held on the eve of the auto show, Mr. Tian Yushi, general manager of FAW-Fuzhou Automotive Parts Co., Ltd., spoke and opened up a fiery bubble in the auto industry, revealing the depth of the auto industry. The question of levels was thought-provoking and won applause from the audience, which aroused strong repercussions from the participants. Based on Mr. Tian Yushi's speech and some of the information he has obtained, the author made a cursory analysis of the problems and countermeasures faced by the auto parts industry in China and discussed with everyone.

Domestic parts and components companies are facing serious challenges in the international market

The average tariff on auto parts has declined rapidly in the past two years. In 2001, the average tariff on auto parts was 22.3%, which fell to 16.3% in 2002 and further declined to 14% in 2003. According to China's WTO commitments, by July 1, 2006, the average tariff on auto parts will be reduced to 10%. In 2002 and 2003, the Office of the Customs Tariff Commission of the State Council and the General Administration of Customs also announced the implementation of the policy of preferential provision of the most favored nationwide tariff rate for components with relatively high localization difficulty.

The continuous reduction in tax rates has led to a substantial increase in the import of parts and components. In 2003, China imported 6.2 billion U.S. dollars in auto parts, an increase of 169% year-on-year, which is equivalent to 30% of the total domestic parts and components in that year. A large number of imported parts pose a serious threat to domestic parts and components products.

However, apart from the influence of tariffs, the increase in the import of parts and components is also due to the popularity of KD parts. Of the new cars that were launched in 2003, 70% were KD parts. The assembly of KD parts can launch new cars in a short period of time to seize the market and gain profits. The higher the car, the higher the profit, and the more serious the assembly of KD parts. As a result, one after another, new cars were launched on the market in just a few months.

When Santana entered China in that year, it took seven years to reach the localization rate from 12.7% to 85%.
At present, the localization level of Santana is close to 100%. During the process of promoting the localization of Santana, the parts and components companies have benefited greatly and the technical level has greatly improved.
But now, just a few months have passed since the new car was put on the market. It is hard to imagine what kind of localization level the new car can achieve and what advanced technologies it can absorb. Although our technical level is much stronger than that of the 1980s.
The large number of foreign parts imported is a disaster for domestic parts and components companies. Some people may say that China's parts and components companies should be brought to market to participate in competition. However, the low level of China's spare parts technology is not formed overnight. It cannot be expected that the parts and components companies will pass through the developed countries in a few decades in the past few decades. GM has a history of nearly one hundred years. Delphi's separation from GM is only a matter of nearly 10 years. It is divided into "single" situations when it is fully mature. Now, insisting that domestic parts companies compete with foreign parts companies is tantamount to putting 3-4 year-old children and 20-year-old strong men in a battle to compete. It is a battle to lose. .

Global procurement is only a matter of mouth g. Foreign-funded enterprises also have national sentiments Global procurement has been raised very loudly in recent years. Many foreign-owned companies claim that they purchase parts and components globally, and quality and cost are the only criteria. But is the actual situation like this?
The new cars that are now being introduced in China are all mature products in the foreign market and there are already mature supporting component suppliers. When foreign companies introduce the entire vehicle into China, they often bring their suppliers of parts and components partners into China, especially in Asian countries. From the perspective of collaboration, this is understandable. However, there is a deeper factor in this, that is, the composition of national sentiment. In other words, under the same conditions, foreign businessmen will certainly give priority to domestic suppliers of spare parts. Fundamentally speaking, as long as it involves the interests of the nation and the enterprise, foreign-funded enterprises will never be lenient.

Zeng Qinghong, executive deputy general manager of Guangzhou Honda Automobile Co., Ltd. believes that the large-scale entry of foreign parts companies is a necessary way. Only these parts and components companies have come in to promote the improvement of China's overall component strength. However, whether overseas parts and components set up factories in China can improve the level of domestic parts and components industry? This remains to be verified. If the joint-venture parts factory does not improve in research and development, its prospects are still not good.

The original intention of our joint venture cooperation is to use the market for technology. In the past few years when the auto market was not very popular, our enterprises had very little attention in negotiating with foreign companies. The conditions imposed by some large foreign companies were very harsh and there was no room for bargaining at all. Now that China has become the last global automotive market that has not yet been fully developed, the rapid development of the market has attracted the attention of all automakers. At this time, we have the capital to negotiate with foreign countries. When foreign companies make special profits in China, should we not allow them to pay a price, bring advanced technology to China, and let domestic companies master these advanced technologies, and they will not always be subject to control.

In this regard, the government should perform its own functions. It should not only focus on immediate interests but also consider the long-term development of the country. For example, it should establish a market-for-technical incentive policy. There must be research and development provisions on the joint venture contract to increase the threshold for joint ventures. Taking the market for money is not a real skill. Taking the market for technology is the real thing.

If the current situation continues to develop, it will be difficult for domestic parts and components companies to become bigger and stronger, regardless of the improvement in the production level of vehicle manufacturers. Correspondingly, the entire vehicle company only became an assembly plant and did not have its own core competitiveness. Now that there is a trend, after foreigners have mastered the sales rights of joint ventures, they begin to try to grasp the purchasing power of joint ventures, which makes it impossible for China to control the market and control costs. According to this development, does China not just become a production subject? How much profit can there be in production?
But what is incomprehensible is that when people shouted out the slogan of global procurement, why did our people also cheer and cheer?

Parts companies must unite and help each other

This year, domestic parts and components companies not only face the challenges of the international market, but also face the challenges of the domestic market. On the one hand, raw materials and energy prices have risen, and production costs have risen; on the other hand, the entire vehicle price reduction has been higher than a wave, and the cost pressure of the entire vehicle manufacturer has been transferred to the parts and components companies. Parts and components companies are struggling.
Under the harsh conditions, the parts and components companies have lowered their prices and vicious competition; some parts companies are not willing to sign contracts at a lower cost in order to obtain a list. Not only disturbed the market order, but also caused the parts and components companies to lose both.

Mr. Tian Yushi pointed out that the countermeasures that parts and components companies should take include:
1. Increase investment in R&D and master advanced technology.
2. Looking for joint venture partners, but the terms should be put forward to research and development.
3. Adjust product structure and convert to high value-added products.
4. Move toward modularity, and recently there was a slogan called "Farewell platform module unbeaten." Parts companies should know what this sentence means.
5. Brand management, the value of the brand is irreplaceable.
Whether it is the media, government agencies, or people concerned about the development of the auto industry, we need to create an atmosphere and environment conducive to independent research and development to help China's still-not-strong parts manufacturers and vehicle brands to become bigger and stronger.

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