China's indigenous auto parts companies suffer from their enemies

Since the outbreak of the global financial crisis, Sino-US trade frictions have come one after another. China's steel products, coated paper, seamless steel tubes, and solar energy products are all involved, and the auto industry is still in trouble. From the tire special protection case in 2009 to the recent “double reverse” survey on steel wheels, the trade friction between China and the United States has had a major impact on the Chinese auto parts industry.

On March 19th, more than 180 U.S. congressmen collectively appealed to President Obama. "Because Chinese auto parts have impacted the U.S. market and the U.S.-China trade deficit has increased in this area," he proposed that the U.S. government take strict measures against Chinese spare parts. Measures.

On the other hand, in the Chinese market, major multinational component companies, including the United States, erode more than 70% of China’s market share. Among them, U.S. component companies have obvious advantages in the high-tech powertrain system and engine market.

Facing the fierce competition in the domestic market and the increasingly harsh international trade environment, what will China's auto parts industry do?

Frequent trade friction in auto parts According to overseas media reports, 188 U.S. legislators claimed on Friday that China has implemented multiple policies to create unequal trade advantages for auto parts manufacturers, including restrictions on the import of overseas auto parts, and Production of auto parts and subsidies, etc., "These strategies have been effective. China's auto parts exports have grown rapidly, increasing by about 900% since 2000."

This "amazing" data comes from the U.S. manufacturing alliance. The industry organization established in 2007, together with the United Steel Association and other organizations, continues to promote U.S. trade sanctions on China's auto parts industry.

The first outbreak was the "tire special protection case." In June 2009, the U.S. International Trade Commission (ICC) imposed an ad valorem special tariff for China's passenger-car passenger and light truck tires for three consecutive years on the ground of Chinese tires disrupting the U.S. market.

Subsequently, the United States began its investigation of China’s “double anti-dumping” (anti-dumping, countervailing) investigations on exports of US steel wheels. In March 2011, the US ruled that Chinese steel wheel manufacturers or exporters would sell steel wheels in the United States. There are dumping and export subsidies.

At the end of January 2012, the U.S. manufacturing alliance and trade unions released a report that the U.S. auto industry has lost 400,000 jobs because of China since 2000; and if China does not stop illegal trade, there are 1.6 million U.S. auto parts and accessories industries. The work is threatened. It was this report that triggered the "strong" resonance of the U.S. bipartisan congressmen.

“The United States’ sanctions on Chinese parts do have a big impact on our exports.” Chen Kangren, president of China Auto Parts Industries, frankly stated that “for a long time the price of our export products has been very low, plus the RMB exchange rate. As a result, the export environment has deteriorated, and profits have approached the freezing point. If sanctions are imposed, the difficulty of developing trade with the United States will increase further."

The foreign-funded enterprises' profitability in China is different from that in foreign countries. Foreign auto parts suppliers are in the market in China. They not only occupy the majority of market share, but also increase their sales and profit margins. According to data released by the relevant departments, as of the beginning of 2010, foreign-invested parts and components companies already accounted for more than 75% of the Chinese market. The number of foreign-funded parts and components companies in China has reached 1200. Among the top 100 auto parts companies in the world, more than 70% of the companies have launched trade in China.

Among them, the United States in China's parts and components companies outstanding performance. Delphi, BorgWarner, Johnson Controls, Cummins and other multinational companies have set up joint venture factories in China to gradually increase their market share in China. Chinese auto parts companies have lost ground in the market.

It is understood that in the field of Delphi's most advantageous powertrain, its market share in China has ranked second in the country; from the perspective of supporting the entire vehicle, the market share is the first in the country. The joint venture company Dongfeng Cummins produced more than 500 horsepower diesel engines, and its market share has already ranked first in the country.

With the rapid increase in market share, the Chinese market has also become an important growth point for US multinational giants. According to data released by Delphi, the company's sales in the Asia-Pacific region were US$3 billion in 2010, of which US$2 billion came from China; in 2011, its development in China was even more rapid, with sales up 21% year-on-year.

In an interview with the reporter, Alibaba, president of Delphi’s Asia Pacific region and president of China, said that in the future, sales in the Asia Pacific region will account for one-third of Delphi’s total sales, and China will become the region with the largest increase.

Cummins, another giant engine manufacturer, is no exception. Fourteen of Cummins' 23 engine series are locally produced in China and a total of 4 joint venture factories have been established. In 2011, Cummins’ sales in China had exceeded US$3.7 billion, and China has become its largest and fastest-growing market in the world.

Domestic companies are in urgent need of merger and integration. Compared with foreign companies' parts and accessories, China's auto parts have been forced to retreat to the edge of the industry in both the international market and the domestic market.

The reason for this is that the vice president of the China Federation of Machinery Industry, Zhang Xiaoxuan, believes that “the international environment is just one aspect. In the final analysis, China’s export parts and components have poor competitiveness, low technology content, and too little added value.”

According to relevant data, from January to November 2011, the total trade volume of China's auto parts industry was 66.043 billion US dollars, of which the export value was 41.052 billion US dollars, the import value was 24.799 billion US dollars, and the trade surplus was 16.062 billion US dollars. From the point of view of export value, the largest part is the components of the driving system, which accounted for 42.28% of the total imports. In the components of the driving system, the total amount of tire exports accounted for 67.7% of the total export volume.

At the same time, from the point of view of the types of export enterprises, the total export volume of wholly foreign-owned and joint-venture companies currently accounts for only 30% of China's total exports of parts and components, but exports account for 70% of the total.

"The technical content of products is very low, low profit margins, chaotic channels, and low technical standards are issues that need to be solved in China's auto parts industry," Chen Kangren told reporters.

He suggested that "in the face of dilemma, China's auto parts industry wants to survive in the cracks, strengthen brand awareness, and adjust the industrial structure should be the best way out."

However, there are more than 200 backbone enterprises of China's general parts and components, and there are countless SMEs. Lack of promotion of specific policies, who will lead these companies to carry out integration work? This is a stumbling block to hindering the growth of the parts and components industry.