In 2009, against the backdrop of global procurement of automotive parts becoming a trend, the thriving popularity of China's automotive parts industry was evident. What supports this popularity is the rapid development of China's automotive parts industry in recent years. According to statistics, in recent years, the average annual growth rate of product sales revenue for vehicle manufacturers has been 28.75%, while the average annual growth rate of product sales revenue for automotive parts companies is 36.82%, which is higher than the industry average. The increase in total indicators outlines the continuous expansion of China's parts industry scale. As a support for the development of China's automotive industry, the parts industry not only requires an increase in scale and quantity, but more importantly, industrial upgrading and the accompanying sustainable development capabilities. It is gratifying that China's automotive parts industry is currently showing four major trends.
Towards industrial clusters
At the end of 2009, the Guangxi automotive parts industry cluster, led by Liuzhou and radiating to Guilin, Nanning, and Yulin, was officially launched. Taking the development of new and renewable energy vehicles and engines as a breakthrough point, cultivating independent brands, jointly breaking through technological bottlenecks in industrial development, and forming new competitive advantages; We plan to establish several distinctive and technologically advantageous professional alliances around the development of the automotive industry worth billions of yuan within 3-5 years, introduce and cultivate high-end talents, form a research and development team that integrates industry, academia, and research, and focus on highlighting major projects and development priorities of automotive parts in Guangxi. We will carry out research and development of new automotive and component products and key common technologies, and form 3-6 key independent brands and 10-20 key independent brand products. We will also add new patents, achievements, and technologies every year.
The market competitiveness of areas with industrial agglomeration is generally higher than that of areas without agglomeration; areas with industrial competitiveness will definitely have a certain degree of industrial agglomeration. "The relevant person in charge of the Small and Medium sized Enterprise Department of the National Development and Reform Commission pointed out that the vitality of China's automotive parts industry clusters in recent years is due to the overall level improvement of the parts industry, and the rapid rise of industrial clusters has in turn stimulated the development and upgrading of the parts industry. Such examples are not uncommon in the international automotive industry, such as Detroit in the United States and Toyota Motor City in Japan, all of which are typical representatives of large-scale automotive industry clusters
After the mid-1990s, China's industrial clusters entered a period of rapid development. With the rapid rise of automobile parts industry bases such as Changchun in Jilin, Shiyan in Hubei, Wuhu in Anhui, Huadu in Guangdong, and the Beijing Tianjin Hebei Bohai Economic Circle in recent years, China has basically formed six major parts concentration areas, including Northeast China, Beijing Tianjin, Central China, Southwest China, Yangtze River Delta, and Pearl River Delta.
In addition to the internal supporting facilities of large automobile groups, the development of domestic parts industry clusters mainly manifests in three forms: the first is to rely on the development of parts industry around the vehicle factory; The second approach is to rely on development zones and automobile cities to develop the parts industry; The third approach is to rely on the development of the component industry at the county level. According to incomplete statistics, there are currently around 1000 industrial parks in China mainly focused on automotive parts, including about 100 key cluster areas or zones.
At a time when industrial clusters are taking shape and the enthusiasm for construction in various regions is not decreasing, there is a growing call to guard against the phenomenon of "gathering but not clustering". Experts call for the quality of industrial clusters to directly affect the speed of upgrading China's automotive parts industry. The automotive parts industry cluster is not simply a pile up of enterprises, but should be a systematic cluster. From raw material, component, equipment manufacturing, joint processing to final assembly and factory delivery, adjustments should be made relative to the industrial chain,
The division of labor and matching within the cluster form a regional aggregation, and each enterprise in the aggregation should generally have a high degree of specialization and strong production capacity. Only in this way can a good foundation be laid for establishing a large industrial cluster.
Trend towards improving ability
Two years ago, Shaanxi Hande Company exported axle technology to India's AMW Automotive Company, marking the first export of China's automotive assembly technology. The cooperation between the two parties includes: establishing an axle factory with an annual output of 120000 axles in India, with Hande assisting AMW in factory design and process design, and transferring the existing advanced axle technology suitable for the Indian market to AMW India through licensing; AMW Company in India will start with the import of fully assembled bridges and gradually assemble Hande axles in semi or fully assembled parts in India; Hande will gradually localize Hande axles in India; Hande will also assist AMW India in developing axles that are suitable for the local Indian market.
Hande's attempt shows the changes in China's automotive parts exports from one aspect. The export of automotive parts is shifting from a single product type to a capital export and technology type; The shift from exporting labor-intensive and material intensive low-end products to exporting high-value electromechanical products has begun; The export market has shifted from the after-sales market to entering the global supply chain of multinational corporations, and the proportion of exports of independent intellectual property components continues to increase.
In recent years, a group of innovative component companies have rapidly emerged in China, such as Wanxiang Group, Shaanxi Fast, Fuyao Glass, Xinyi Glass, Guangxi Yuchai, Shenzhen Hangsheng, Zhejiang Yinlun, Nanjing Autojia, etc. They deeply cultivate specialized segmented markets and have mastered the core competitiveness of advanced products through continuous innovation and exploration. According to statistics, there are currently 7 national high-tech enterprises and nearly 100 provincial-level high-tech enterprises in China's automotive parts industry. The improvement of innovation capability, especially in key components, enables independent brand automotive parts to have new market positions. The engine is the "heart" of a car, a truly critical component. Domestic car manufacturers Chery, Huachen, and SAIC have successively launched engines with independent intellectual property rights in the past two years. As a professional engine manufacturer, Guangxi Yuchai has the ability to independently develop products that are synchronized with international advanced levels, occupying a strategic high ground in participating in competition in domestic and international markets.
Regardless of the method, Chinese component companies, especially backbone component companies, are constantly expanding their business areas and building industrial chains that are in line with their advantages. Only by grasping the direction of industrial development can we survive in the market for a long time. Huachen Group and Shanghai Automotive Transmission Co., Ltd. cooperate to produce manual transmissions and dual clutch automatic transmissions (DCT) for cars. The first phase plan is to produce 500000 transmissions per year, including 100000 automatic transmissions. The second phase plan is to produce 1 million transmissions per year. Industry experts believe that joint development between vehicle manufacturers and component companies on general components can help component companies improve their systematic and modular supporting capabilities by establishing a common development platform. In recent years, systematic design and modular supply have become the development trend of the international automotive parts industry. The formation of this capability requires component companies to establish long-term strategic partnerships with vehicle companies. Component companies actively participate in the product research and development of vehicle companies and continuously improve their own research and development level.
Trend towards overseas mergers and acquisitions
Since 2009, the sustained downturn in the global automotive market has meant more opportunities for China's automotive parts industry. World automotive giants will better focus on the Chinese market. In the past few years, multinational automobile companies only introduced products in China, but now they have placed key components, engines, and research and development centers in China. Component manufacturers will have more opportunities to go global, and overseas acquisitions will usher in good opportunities.
On December 14th, Zhejiang Automotive Parts Company, Ningbo Yunsheng Co., Ltd., and four shareholders of Japan's Rixing Electric signed an equity transfer contract. Ningbo Yunsheng acquired 79.13% of the equity of Rixing Electric Industry Co., Ltd. for nearly 92 million yuan. The acquisition is not yet completed, but Ningbo Yunsheng has already formulated an ambitious development plan. After this acquisition, Yunsheng's entire automotive motor business will rapidly expand from an annual sales volume of around 200 million yuan to a sales scale of 600 million to 700 million yuan. With the expansion of China's OE (automotive parts) supporting market, sales are expected to increase to over 1 billion yuan in 2-3 years.
Over a month ago, another automotive parts company, Holy Dragon Group, acquired SLW GmbH, a subsidiary of BorgWarner. Saint Dragon Group has acquired over 90% of SLW, a subsidiary of BorgWarner Bros., a Fortune 500 company, for $15.994 million. This acquisition has enabled the Holy Dragon Group to acquire SLW's technology and market share, and Holy Dragon's automotive oil pump market share ranking is expected to rise from fourth in the world to second.
On November 2nd, the largest overseas merger and acquisition of automotive components in China was finalized in Detroit. Jingxi Heavy Industry officially signed a contract with Delphi Corporation of the United States to acquire machinery and equipment, intellectual property, and customer and product supply contracts related to Delphi's business for no more than $90 million.
This acquisition not only enables Jingxi Heavy Industry to acquire relevant technology, but also involves its supply chain. Compared with the development of the entire vehicle industry, the development of China's parts industry lags far behind. The suspension and braking businesses acquired by Jingxi Heavy Industry this time are urgently needed technologies in the domestic automotive industry. By utilizing the latter's technological advantages, we can achieve rapid development in a relatively short period of time. At the same time as acquiring Delphi's related businesses, Jingxi Heavy Industry also inherited Delphi's supply contracts with international large automotive companies such as BMW and General Motors. This means that the stage of Jingxi Heavy Industry has been the global market from the beginning.
If the ongoing overseas acquisitions of components are included, there were more than 10 overseas acquisitions of local component companies in the second half of 2009. The global financial crisis gave local component suppliers the best opportunity for leapfrog development, but overall it was not beneficial for Chinese component companies. At present, Chinese component suppliers are still in the stage of enjoying a feast, but local component suppliers should be proactive and seize the best opportunity to acquire high-quality overseas assets or technologies, so as to grow faster and prepare for future large-scale integration.
The revitalization plan for the automotive industry, which was introduced in early 2009, stated that "key component technologies will be independently developed". In addition, the central government will invest 10 billion yuan in the next three years as special funds for technological progress and transformation. Driven by the policy of encouraging the "localization of core components" by the government, more and more Chinese companies view overseas bottom fishing as the best path to acquire core technologies.
Trend towards mergers and acquisitions
The integration of the global automotive parts industry is far greater than that of vehicle companies, and the Chinese automotive parts industry, especially the OE (automotive parts) supporting market, will eventually usher in a huge wave of integration, "said an industry expert.
In recent years, overseas automotive component giants have seized the opportunity to enter China through joint ventures and collaborations. Many foreign automotive parts manufacturers such as Delphi, Wescast, Cummins, etc. have already established dozens of production bases and subsidiaries in China. Nowadays, foreign investment controls up to 70% to 80% of automotive parts, especially the supply chains of Japanese and Korean manufacturers are almost closed to local Chinese suppliers. This has resulted in local suppliers losing the opportunity to develop together with vehicle companies. According to statistics, the market share of the top 100 domestic component industry enterprises only accounts for 50% of the entire industry, far lower than the concentration of other countries (regions). Although the overall revenue of the parts industry reached 837 billion yuan in 2008, 80% of enterprises above designated size had sales revenue of less than 100 million yuan, and only 43% of parts enterprises in the industry had patents, with less than 20% of enterprises having invention patents. In the era when the country encourages mergers and acquisitions in the entire vehicle industry, domestic component supply enterprises were the first to be shaken. Now that integration and restructuring are imminent, it is imperative.
At present, the top four global automotive parts giants either rely on OEMs for support, such as Delphi for General Motors. The advantage is that they can quickly develop and grow with the help of OEMs, but the disadvantage is that survival will be very difficult when OEMs are in a downturn; Either it is an independent system supplier, represented by Bosch Group in Germany. Currently, among the domestic A-share listed automotive parts companies, Dongfeng Technology, FAW Fuwei, and Qiming Information belong to the former, which are respectively affiliated with Dongfeng and FAW Group; Represented by Wanxiang Qianchao, Ningbo Huaxiang, Weichai Power, and Fuyao Glass belong to the latter.
It is understood that the current automotive parts industry in China is more fragmented than the entire vehicle industry, with over 5000 parts manufacturers, and the survival situation of independent spare parts enterprises is worrying. Foreign investment has already accounted for over 60% of the market share in China's automotive parts market, and over 80% in the sedan parts industry. At present, most domestic component companies have low sales, and compared with multinational giants with sales of billions of dollars, the scale of Chinese component companies is significantly smaller. The quickest way for domestic component companies to gain a foothold in the future international market competition is through mergers and acquisitions, forming large-scale component enterprise groups.
Many industry insiders believe that mergers and acquisitions of component companies are more urgent than those of complete vehicles. Without the emergence of large component companies, costs cannot be reduced and quality cannot be improved, making the development of the entire industry extremely difficult.
In the context of small scale, weak strength, and insufficient research and development capabilities of domestic component enterprises, if the component industry wants to develop rapidly, it must accelerate mergers and acquisitions to form economies of scale. If the relevant departments of the country can provide specific policy support, it will undoubtedly accelerate the process of mergers and acquisitions of component enterprises. Officials from the National Development and Reform Commission have stated that introducing policies to encourage mergers and reorganizations in the domestic parts industry is a very complex task; It is currently unknown whether and when relevant policies will be introduced.