Five major weaknesses in the development of parts and components for China's automobile industry
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To become a neutral, comprehensive and professional international supplier of parts and components is a strategic development goal for many parts and components of China's auto companies. However, at present, most companies are far from this goal. The business is highly dependent on the group's customers, weak R&D strength, lack of core and main products, and overseas market development lags behind...it is the general status quo of China's auto group component parts.
With the rapid expansion of China's automobile industry in recent years, domestic parts and components companies with production value of RMB 100 billion have begun to appear. However, most of these companies are independent auto parts companies. After sorting out the parts and components business of China's automobile group, the reporter found that the parts and components section of China's vehicle group lags far behind the development of the entire vehicle segment. This is not only reflected in the mismatch between the production value of the parts companies and the output value of the entire vehicle. It is also reflected in its weak development capabilities, slow product upgrades, inability to support vehicle technology upgrades, weak market awareness, slow market response, lack of competitive vibrancy, single market and product structure, and weak resistance to risks.
Group market highly dependent on a weak sense of over-reliance on <br> <br> business customers of the Group, is a major feature of our Group's vehicle parts business, it is a major drawback. This is most evident in the two automobile groups of FAW and Dongfeng.
Take FAW Group, a parts and components company of FAW Group, as an example. Since its establishment in 1993, FAW-Fuwei has been the core supplier of FAW Jiefang, FAW Car, FAW-Volkswagen and other auto companies in FAW Group. Its main business is supplying the entire vehicle customers within the group. According to the 2014 annual report of FAW-Fuwei, 94.83% of its sales come from the top five customers, and these five customers are all from affiliates of FAW Group. It's hard to imagine that a company that claims to be trying its best to build a leading domestic and internationally-renowned auto parts company will have so little sales outside the group for so many years.
Dongfeng is no exception. In the first half of this year, Dongfeng Parts & Components Co., Ltd. completed a total of 5.015 billion yuan in net income from its main business. The majority of this revenue is also from customers of Dongfeng Automobile Group.
Relying on the days of the group's customers is a true reflection of many parts and components companies. This is not inconsistent with the fact that vehicle companies have interfered too much in the operation of their parts and components companies. In fact, in the past decade or so, many parts and components companies have not changed their attachment status to the entire vehicle group. Some vehicle companies consider it their own "children." In their development, they either overemphasized that the parts and components section must obey the interests of the automakers, "catch up" the children who are struggling, and limit their external supply, thus depriving them of market opportunities. Either pamper the child who is not defensive, blindly protect it in the supporting process, and gradually lose its competitive vitality. Therefore, we have seen that in addition to some leading enterprises, many parts and components companies within the system can only rely on group orders to maintain their livelihoods, and some even become a heavy burden for the development of the group.
Widespread suffering from joint venture dependency
For China’s auto industry, which is mainly based on joint ventures (especially in the field of cars), the joint venture phenomenon of parts and components companies seems to be generally understandable. However, today, the original intention of our initial joint venture does not appear to be realized. It is difficult to realize the development of independent components and parts industry through joint ventures. On the contrary, the development of the auto industry today, the joint venture component dependency of the vehicle group seems to have become more serious. .
In sorting out the capital chart of the auto parts group today, we can see that the joint venture is still the dominant force of the auto parts segment in China. This dominant position is reflected not only in the proportion of the joint venture, but also in the equity of the foreign party. The proportion is high, which is reflected in the fact that foreign clients have abundant resources, strong technical discourse power, and great contribution to corporate income. This is even a powerful Huayu automobile. What is even more regrettable is that in the area of ​​commercial vehicles that China is proud of, the trend of joint ventures has gradually become stronger in recent years. Foreign-controlled companies are even more of a trend.
Why is China's parts and components sector gradually declining in a large-scale joint venture? Where is the significance of the joint venture? This is a question that China's entire vehicle company needs to reflect on its strategic development.
Poor integration of resources lack of business support <br> <br> main construction vehicle parts sector group in our country, mostly to follow the development from "large" ideas. With the expansion of the vehicle customer business, the parts and components business of the entire vehicle group has also expanded, but overall, most of these business expansions are to meet the development needs of the vehicle manufacturer at the time, and are lacking in combination with the actual situation of the company. Clear strategic development plans for parts and components, and do more to strengthen awareness. Most of the entire vehicle companies do not focus on the core business with core competitiveness within the group, achieve product transformation and upgrading, and support the company's future sustainable development.
This point is reflected in the market. What we are seeing is that in the various market segments of auto parts, whether it is from the market share, scale or technical strength competition, leading companies emerged from the spare parts enterprises of the auto group. Not much.
However, it is gratifying that in recent years, SAIC, BAIC and other vehicle companies have realized this, and are actively trying to sort out their parts and components, to build the future of the leading products and the main business sector. For example, from the overall strategic development needs of the company, Huayu actively explores the business adjustment and withdrawal mechanism; Beiqi proposes to focus on building Yingnafa skylights, lightweight, and intelligent three major businesses; GAC also proposed joint ventures and cooperation and independent management as the main line , Gradually build five business systems: interior and exterior decoration, chassis, power, lighting, and electronics.
The market is still mainly lacking in the domestic supply capacity of the domestic <br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br> Although the entire vehicle company has set overseas market expansion targets for its parts and components segment, the performance of the overseas market of the group's component companies is not very impressive Except for some companies acquiring global parts and components companies by capital, most of the overseas market share of parts and components companies is negligible. Take Huayu Automotive as an example, its revenue in the international market in 2014 accounts for less than 2%, not to mention the overseas market products and service layout. The overseas market for the spare parts of other vehicle companies has grown, with exports of vehicles, and the expansion of overseas markets. This may be related to the pace of overseas expansion of China's vehicle companies. However, it lacks a strategic unified plan at the group level, and it is not unrelated to actively promote the expansion of the external business of the parts and components group.
Fortunately, this situation is expected to change in the next few years, some companies are expected to promote their overseas business arrangements through international cooperation and mergers and acquisitions. For example, Yanfeng Automotive Trim Systems Co., Ltd., a wholly-owned subsidiary of Huayu, will cooperate with Johnson Controls in the automotive interior business globally. In the “13th Five-Year Plan†of Hainagawa, it is also clearly stated that by 2020, it will become a global leader in 2 to 3 market segments, and the Group’s external market share will reach 50%. For domestic parts and components companies that have been fighting at home, the expansion of overseas markets is still a huge and complicated system project. To become a supplier of components with international supply capability, there is still a long way to go.
Ability to develop behind the lack of endogenous power <br> <br> the past two years, within the system parts companies market share within the group atrophy is a new phenomenon emerging industry. In the current situation in which the market has continued to adjust to sluggish conditions, both FAW, Dongfeng, and Chunghwa, JAC and other vehicle companies have the phenomenon that the traditional market share of their parts and components enterprises is “diverted†by outsiders. All may be attributed to the lack of endogenous growth momentum of the company itself.
The rigid system, low operating efficiency, weak product development capabilities, and weak market awareness are common problems for vehicle parts and components companies. Over the years, these companies that have been living comfortably have lagged far behind their peers in terms of quality control, R&D capabilities, and product quality upgrades. With the increase in competition pressure of vehicle customers, the active choice of suppliers that are more favorable to their development is the main reason for the shrinking of the parts and components companies market. What's more, many vehicle companies have begun to peel off non-core parts and components, which means that these companies growing up in the “greenhouse†suddenly have to face the fierce competition in the market and the pressure for survival can be imagined.
Building Delphi, Visteon, and Marelli in China's auto industry is one of the dreams of our own auto industry. From the current perspective, this may only stop at the dream. If the entire vehicle group’s existing strategy for the development of parts and components does not change, the status quo of parts and components development for most vehicle companies will not change fundamentally, and the possibility of producing “carriers†for parts and components from China’s auto group will also be significant. Minimal.
