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Automotive Technology Development Brings New Opportunities to Parts Industry
In 2005, the global automotive industry experienced rapid technological advancements, with innovations in vehicle technology becoming increasingly evident in automotive components. Electronic systems were widely integrated into car parts to address longstanding challenges in safety, emissions, fuel efficiency, and comfort. This integration significantly enhanced vehicle performance and user experience. A substantial portion of automotive design patents—70%—were held by component manufacturers rather than整车 (original equipment manufacturers), highlighting the growing influence of suppliers in shaping modern vehicles.
Zhao Hang, director of the China Automotive Technology and Research Center, emphasized that these technological developments presented significant opportunities for China's auto parts industry. He noted two key aspects: first, through a process of technology introduction, absorption, and innovation, Chinese companies could now develop new automotive technologies on par with global leaders. Second, decades of industrial accumulation and international technology transfer had enabled the traditional parts sector to leverage its competitive advantages and become more globally integrated.
Since the reform and opening-up, China’s automotive industry has absorbed over 1,000 foreign technologies through cooperation with international automakers. As a result, domestic production now matches world-class standards, and new models are increasingly aligned with global trends. While multinational corporations still drive much of the technological progress, more local firms are exploring new R&D strategies and expanding their technology sources.
Over two decades of technology absorption and industrial upgrading, China’s auto parts industry has made remarkable progress. Some companies have reached internationally comparable levels of equipment and technical capabilities. According to Shen Ningwu, deputy secretary-general of the China Association of Automobile Manufacturers, the development of automotive electronics is key to advancing the industry. China’s electronic systems are now in sync with global trends, boosting safety, environmental protection, and energy-saving technologies. Future cars will be more connected, intelligent, and multifunctional, offering features like entertainment, communication, and even office functions.
Shen predicts that the proportion of automotive electronics in manufacturing costs will exceed 30% in the coming years. The application of electronic technology will be crucial for sustaining China’s auto parts industry growth.
With the "Automotive Industry Development Policy," China’s auto parts companies are encouraged to align with global trends and actively participate in OEM product development. They must build system development capabilities and meet international production standards to enter the global procurement system. Zhao Hang believes that localization and internationalization can enhance the competitiveness of the entire industry. In recent years, China’s auto parts exports have surged, becoming a major driver of auto exports. Export values far exceed import figures, and the market position of Chinese auto parts companies continues to grow. Major global automakers are shifting R&D and production to China, creating a talent pool that will eventually boost independent innovation.
China’s auto parts companies also benefit from lower labor costs, a large number of engineers, and strong production capacity. With over 60% of auto parts varieties produced domestically and a satisfaction rate of over 70%, China is well-positioned to meet both local and international demand. High-tech components like ABS, airbags, and electronic fuel injection systems are also being developed locally. As globalization accelerates, Chinese factories equipped with advanced technology are set to become a key player in the global auto parts supply chain.
However, challenges remain. Gan Zhihe, director of the Investment and Planning Department at the State Economic and Trade Commission, pointed out that China’s auto parts industry faces issues such as small-scale operations, lack of independent R&D capabilities, and regional protectionism. The fragmented nature of the industry and reliance on foreign models have hindered economies of scale. To seize the opportunities brought by technological progress, parts companies must invest more in R&D and foster innovation.
With shorter product life cycles, auto parts companies must take on greater responsibilities in vehicle development, integrating with OEMs in simultaneous product development and adopting advanced technologies like electronics and networking. To meet these demands, they need to increase R&D investment and strengthen their independent innovation capabilities. Gan Zhihe suggests that large groups should focus on high-tech and electronic systems, while smaller companies should prioritize quality control and collaboration with automakers to ensure seamless integration. Ultimately, the success of the auto parts industry depends on leveraging strengths, fostering innovation, and building a professional, large-scale industry.