Home
/ Interview & Commentary / News detail
A glimpse of China's auto parts industry in 2007
Since China's entry into WTO, China's auto parts sector has experienced a period of fast expansion. Back in 2002, total industry assets of China's auto parts sector accounted for only 5 percent of China's whole automotive industry. By 2006, it reached 35 percent. Nowadays, automotive industry has a pillar in China's economy and auto parts sector has become an essential part of in China's automotive industry.
By 2006, China's automotive industry started to walk out of a stagnation that had dominated the sector since the second half of 2004. The whole auto parts sector entered the fast track. Latest data provided by China's National Statistic Bureau indicate that in 2006 the total value of China's auto parts industry output reached 539.70 billion yuan ($75.38 billion), up 34.71 percent from one year earlier. In the same year, China imported $12.46 billion worth of auto parts products, up 34.18 percent from one year earlier while the country exported $21.07 billion auto parts products, up 38.21 percent from one year earlier.
On the other hand, China's enormous market potential and seemingly unlimited supply of cheap labor resources is attracting more and more global suppliers. Official statistics show that China has a total number of more than 5,000 auto part suppliers across the country and over 1,200 out of the 5,000 are foreign-invested suppliers, including those listed as World Top 500. China is becoming a huge auto parts production base for the whole world and competition in this market is intensifying.
The pressure is passed on to the auto parts suppliers from the OEMs where competition intensifies. To solve the problems facing the suppliers, i.e. fragmented structure and low efficiency, to cut the cost and enlarge the business, the scale economy of auto parts industry should emerge with the driving force of the market. So in the coming years, more merger and acquisition in the auto parts industry and among different industries should take place under the guideline of China’s macro-economic policy; the Chinese auto parts suppliers should maximize the efficiency and minimize the cost, thus they could have competitiveness against the foreign-owned enterprises.
Subsection of the auto parts industry, such as engine, chassis, tire and electrical parts, have retained strong growth. In terms of investment, the capital flows into several major systems of auto components—first, engine components. Led by manufactures of engine assembly, piston, piston ring, radiator, the investments focus on power train and electrical fuel injection system; second, chassis components. Led by suppliers of gearbox, gearing, brake system and shock absorber, the investment flows to chassis products, especially the chassis assembly; third, non-metal components like rubber, tire and plastic parts as well as casting and forging units; forth, interior accessories. Suppliers producing air conditioner and heating system, seat and angle adjuster invest a lot in their business; fifth, auto electronics.
Geographically, China's auto parts suppliers are clustered in five major areas: the Bohai Bay area, the Yangtze River Delta area, the Pearl River Delta area, Hubei province, and the Central and Western China areas. Statistics collected at the end of 2006 show that China has a total of 6,142 auto parts suppliers which spread over the above-mentioned areas. In the Yangtze Delta area, Zhejiang province boasts of a total 1,279 or 20.82 percent of China's auto suppliers. These suppliers are most heavily concentrated in Zhejiang, Jiangsu, Shandong, Hubei, Shanghai and Guangdong. Suppliers in these the above mentioned 5 provinces and Shanghai account for 57.96 percent of the country's total.
Despite a recent impressive growth, China's auto parts industry faces severe problems involving industry fragmentation and lack of access to technology and funds; these problems not only hamper the healthy development of the auto parts industry, but will also impact the auto industry as a whole.
Generally, China's local auto suppliers can only produce auto parts with the low technology content, while production of high-tech products such as shock absorber, powertrain, air bags, automatic transmission and GPS are still in a primary stage. Most of the new and high technologies are controlled by foreign companies, who are effectively blocking technology transfer to Chinese competitors. Therefore China's auto parts suppliers need to raise their innovation ability and technical contents in order to better compete with foreign rivals.
Gasgoo not only offers timely news and profound insight about China auto industry, but also help with business connection and expansion for suppliers and purchasers via multiple channels and methods. Buyer service:buyer-support@gasgoo.comSeller Service:seller-support@gasgoo.com
All Rights Reserved. Do not reproduce, copy and use the editorial content without permission. Contact us: autonews@gasgoo.com
