1.Warring stage
·Local suppliers:
Three major business group: FAW, Dongfeng, SAIC, Beijing Auto Group...
Government ministries and military: Hafei, Changhe, Changan…
·The features of local suppliers
Mostly supply to local-brand commercial, agricultural, busses, and low-end cars
Low scale of economy, poor capability and technology
Ownership: SOE and Private/Collective
·Multinational suppliers:
Japanese system (Honda, Nissan, Toyota): Denzo, toyo, aipine,
US system (GM and Ford): Delphi, Visteon, TWR, Lear, Eaton, JCI…
German system (VW and Audi): ZF, Bosch, Behr, Continental, GKN…
French System (PSA): Valeo…
·Multinational suppliers
Mostly supply to high- or mid-end passenger cars
Many are JVs with local suppliers. Most firms enter with prefer green field of acquisition
Ownership: IJV and WOFE
2.Geographic clustering
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3.Chllenges
①Lack of scale
Many OEMs are not producing at economic scale
Too many players in each segment
②Shrinking profit space due to
Cost pressure from OEMs
Rising price of materials
③Fast changing and unpredictable market
④New entrants
4. Opportunities
①Global and local pressure to produce auto parts in China
Local market
Chinese Government Push: "Policy on Auto Component Import" (2006-7-1)
Increasing pressure on const and market reaction
Global market: E.g. Ford’s order in china: 2002, less than $0.1 billion total , $ 10 million by 2010.
②Global and local pressure to engineer in China
Need for design localization
Need for launching new models
Low cost and well educated Chinese engineers
E.g. Delphi, Bosch, and Valeo are investing 50m$, each to set up R&D-Engineer centers in China.
③Growth Potential
1995-2003, suppliers grow faster than OEMs(6.6% more annual growth rate in profit, 2% more in revenue growth).
