The price advantage weakens the export of parts and components

Chery's related sources told reporters that in the procurement of parts and components, in the past always the lowest price quoted by local companies in China, but recently there has been a case where foreign companies offer lower prices. Industry analysts believe that since foreign-funded enterprises share their cheap production materials and labor with local companies after they build factories in China, coupled with the management, technical advantages, and long-term marketing strategies of foreign-funded enterprises, it is also possible that the quotation is lower than that of local companies.

The question is, what kind of path should China's parts and components companies follow along with the weakening of price advantages?

Some parts companies have already felt a slight chill under the pressure of RMB appreciation. When the reporter interviewed Chen Yujin, the minister of marketing of Yizheng Shuanghuan, he felt the vitality.

In 2007, Shuanghuan’s exports amounted to 50 million US dollars, an increase of 40%, compared with only 10% in previous years. “Our export growth has been very large last year. It can be said that from the beginning of 2007, our exports have entered a period of rapid growth, and we expect the increase in 2008 will be even higher than in 2007.” Chen Yujin said that before 2007, Shuanghuan had been working on some International companies do small-batch matching and experienced a period of running-in. In 2007, companies received large orders from many companies, so the export volume will have such a large increase. It is reported that Shuanghuan has entered the supporting system of Ford, PSA, Komatsu, Hino and many other international companies. Shuanghuan's experience is "trying for cooperation, seizing opportunities, and continuously improving."

At present, there are three ways to export auto parts in China: one is to enter the foreign aftermarket; the other is to enter the global procurement system of multinational corporations; and the third is to export with the whole vehicle. Among them, the proportion of people entering the aftermarket is the largest, and those in the industry believe that it is more than 80%. This market is price-sensitive, and Chinese products that are predominant in price are subject to anti-dumping. In 2006 alone, China’s auto parts have been subjected to more than 10 anti-dumping investigations.

There are also parts and components companies that benefit from the export of vehicles. Hande Axle Co., Ltd. only passes nearly 5,000 axles to the Russian market through the vehicles of Shaanxi Heavy Industry, Anhui Hualing and other companies. However, judging from the current situation, despite the rapid export momentum of self-owned brand cars, Chery, Great Wall, Brilliance, Geely and other independent brand enterprises have established their own assembly and production bases overseas, but they have not established their own parts and components in the region. system. It may seem that there is still a certain distance between the parts companies in order to compete with the entire vehicle company in the international market.

China's auto parts companies face many opportunities. According to statistics, multinational companies spent a total of US$50 billion in spare parts purchases in low-cost regions between 2005 and 2007, 70% of which targeted China. Industry experts believe that it is an effective way for companies that have a certain R&D capability and strength to actively contact and enter into their global procurement system.

Chen Yujin said that in order to increase the R&D capabilities of enterprises, we can accelerate the pace of exports. Yizheng Shuanghuan spends 5% of its sales revenue on R&D each year, while the industry average is less than 2%. “Only R&D capabilities can keep pace with the development of international buyers, so as to win opportunities for cooperation with international companies.” Chen Yujin believes that cooperation with international companies not only opens up the international market, but also enhances the overall quality of the company.

Relevant experts believe that for companies with relatively weak domestic strength and unable to enter the multinational procurement system, choosing a cooperative relationship with foreign small and medium-sized component companies is an effective way. Both SMEs in Canada and the United States are facing increasing cost pressures. They are starting to shift production to lower-cost emerging markets such as China and India. Chinese local component companies should pay more attention to such information.