GM to buy more high-value car parts in China

BEIJING (Reuters) -- General Motors expects to buy more, increasingly sophisticated car components in China, the firm's fastest-growing procurement market, as the country's auto parts industry clambers up the quality ladder.

GM, one of the world's top two auto makers, will increase its procurement spending in China by 25 percent a year in the period 2005-2010, a senior executive said today.

Bo Andersson, group vice president in charge of GM's global purchasing and supply chain, declined to give a dollar total for the plastics, electronics parts, aluminum wheels and other components that GM buys in China.

Andersson said the local industry was increasingly producing higher value-added parts that GM now procures elsewhere.

GM, which buys 20 million parts a month from 190 Chinese suppliers, had experienced no quality problems over the past year, he told a news briefing.

"You will see a shift into air conditioning and also chassis parts, steering parts and brake parts," he said.

Andersson said 90 percent of the materials and parts in a locally manufactured GM car are sourced in China -- 60 percent of them from multinational firms and 40 percent from Chinese rivals.

He cited Dicastal Wheel Manufacturing Co Ltd, which after just a few years as a GM supplier now provides half of all the aluminum wheels that GM uses globally.

GM is reducing costs after losing more than $12 billion in the past two years. It is in the midst of a sweeping restructuring that includes cutting more than 34,000 jobs and closing 12 plants in North America.