To get around the rising trade protectionism against Chinese products has been a major factor pushing China’s auto parts makers to step up overseas mergers and acquisitions, industry experts once said.
Following Wanxiang Group’s attempt to buy struggling U.S. company Delphi, China’s Ningbo-based Huaxiang Group bought UK interior supplier Lawrence for 3.4 million pounds, about 51.95 million yuan. Through the deal, Huaxiang, dominant auto parts supplier in China, will become an OEM supplier to globally famed carmakers as Cadillac and PSA.
Other similar moves are underway, with tentative buyers including Fuyao Glass, dominator of the country’s auto glass market, and Dongfeng Automobile Corp.
Most of the country’s auto parts producers are considering export, with those larger ones already on the path of overseas acquisitions, said Guo Yan, a postdoctoral researcher with the China Automotive Technology & Research Center (CATRC).
Analyst Wang Cunming pointed out that Wanxiang, Fuyao, Huaxiang are all established private auto parts suppliers with their own comparative advantages in their respective fields, but for most of the country’s auto parts manufacturers, overseas mergers and acquisitions are still distant.
Though rising fast in volume, China’s auto parts export is still low in technological content and added value, said Shen Ning, deputy secretary general of the China Association for Automotive Manufactures.
Other experts hold that merely replying on cost advantage, largely thanks to lower labor cost, will not take Chinese auto parts export far.
China once set a goal aiming to lift the value of its vehicle and auto parts exports to US$120 billion, or 10 percent of the world's total vehicle trading volume, over the next decade. In 2006, China's vehicles and auto parts exports made up only 0.7 percent of the world's total vehicle trading volume.
To make China’s auto parts a major force on international market hinges on the rise of China’s auto-making industry, CATRC’s Guo Yan said. When more and more Chinese auto makers set up plants overseas, most of the country’s auto parts suppliers can go there as well, Guo predicted.
