Beijing Hyundai to promote procurement in China

Beijing Hyundai, a joint venture between South Korea's biggest automaker Hyundai Motors and Beijing Automotive Industry Holding, is actively planning to promote procurement in China in the hope of cutting costs. But the problem is that it's far from being complete. All the business of the joint venture must be decided by its South Korea headquarter first, for the automaker to purchase auto parts in China.

"We need to test all the auto parts we purchase in China first to ensure they meet our requirements, and this procedure often takes at least one to two weeks, "said Hyuandai spokesman Oles Gadacz.

Beijing Auto has appointed Li Xia as its new deputy managing director to take charge of procurement for the JV this past February, and the Chinese partner aims to secure more decision-making rights by explore business and procurement channels on its part. For example, Beijing Auto is planning to set up a new R&D center with Johnson Controls based on their existing joint ventures in China, and the automaker has set up other auto part ventures with two Chinese suppliers at Shandong and Zhejiang respectively.

Beijing Hyundai sold 290,000 vehicles last year, having failed to meet its sales target of 300,000 units. In the first half year its sales declined by another 15.7% to 112,140 vehicles. The joint venture expects to boost its sales to 310,000 units in China in 2007.