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"Weichai, Yuchai, Xichai, Fast, Fuyao Glass, Wanfeng Auto Wheel, Universal, Ningbo Huaxiang, Catic Parts, Air Sheng, and many other automotive electronics enterprises have achieved growth. Additionally, major automotive companies such as Changan, Brilliance, Jianghuai, Chery, and Sinotruk have independently developed components for transmission systems, etc. This will serve as the foundation and cornerstone for the future development of automotive components in China." Recently, Ye Shengji, Deputy Secretary-General of the China Association of Automobile Manufacturers, stated in his strategic message at the 2014 Annual Conference of China's Automotive Component Industry, themed "Cooperation Among Component Suppliers – Striving to Expand and Strengthen China's Automotive Component Industry," that the basic development situation of China's automotive components is positive. However, the continuous expansion of the industry's scale will trigger changes in the competitive landscape, and the future development of Chinese brand component enterprises will become increasingly difficult.
90% of products from Chinese brand component companies are concentrated in the mid-to-low-end segments
"The market share of Chinese brand component companies is declining," Ye Shengji said at the meeting. According to incomplete data, the number of component enterprises exceeds 10,000 (among which large enterprises account for fewer than 6,000). Foreign enterprises (100% foreign-owned: 45%; Sino-foreign joint ventures: 55%) make up 20% of large enterprises, yet their market share exceeds 70%. The market share of Chinese brand component companies is less than 30%, with 90% of their products concentrated in the mid-to-low-end segments.
Ye Shengji believes that in recent years, foreign and Sino-foreign joint ventures have developed rapidly, monopolizing key and core technologies, while Chinese brand components have been pushed to marginal positions. Among component enterprises that master key and core technologies, foreign-invested enterprises account for over 3/4 of the entire industry (100% foreign-owned: 40%; Sino-foreign joint ventures: approximately 35%), while non-core components are concentrated in Chinese brand component enterprises. "The technical level of automobiles is mainly reflected in key and core components, and the development of component enterprises has become the key to expanding and strengthening China's automotive industry," Ye Shengji noted. He added that foreign companies occupy 90% of the market in high-tech fields such as automotive electronics and key engine components. Meanwhile, over 95% of core components like engine management systems (including electronic injection) and over 90% of ABS are produced by foreign enterprises.
The development of the component industry is in urgent need of top-level planning
Due to insufficient investment in research and development, a shortage of talents, weak technological innovation, and a lack of original products, Chinese brand component enterprises struggle to compete with leading foreign enterprises in terms of independent innovation capabilities and core product competitiveness.
Ye Shengji believes that the current development of China's component industry is facing challenges from all sides.
First, there is a lack of systematic planning for the strategic transformation and upgrading of the automotive component industry in the country, as well as corresponding supporting measures to stimulate the development and production of key components. As a result, automotive component enterprises develop in isolation, fail to form a collective force, and key components cannot purposefully participate in joint research or achieve breakthroughs in specific technologies.
Second, facing increasingly stringent national requirements in energy conservation, environmental protection, safety, and other areas, as well as ever-rising quality demands from automakers for parts, Chinese automotive component enterprises are under pressure to improve overall quality.
Third, synchronized development with automakers has become a basic requirement for component enterprises. Looking to the future, component enterprises are required to possess not only basic development capabilities but also advanced R&D technologies.
Fourth, some Chinese brand automotive component enterprises insufficiently understand the industry's characteristics, lack strategic planning, invest inadequately, focus on short-term interests, and face deficits in research and development, production, management, and talent. All these factors widen the development gap between Chinese brand component enterprises and foreign companies.
Fifth, to meet automakers' requirements, all component enterprises have obtained ISO9000 and ISO/TS16949 certifications. However, some enterprises insufficiently understand the purpose of certification, weakly implement management systems, and have low system operational efficiency, making it difficult to ensure consistent product quality stability.
In addition, for a long time, the cooperative relationship between automakers and component enterprises has been disharmonious and urgently needs improvement. At the same time, cooperation between component enterprises and vertically integrated industries also needs to be strengthened.
Under the new normal, China's automotive component industry must achieve transformation and upgrading to find a way forward. Ye Shengji believes that to guide the healthy development of the automotive component industry, it is necessary to study and determine the future development direction of the component industry as soon as possible, and formulate its development plans and goals. By 2025, a complete component supply system with high international competitiveness should be established and strengthened, a nearly complete product development system should be formed, and the strategic transformation of China's component industry from production to innovation should be practically realized.
