China's local auto parts companies face challenges


Compared with the top 100 auto parts suppliers in the world, the sales revenue of China’s “Top 100 Parts” is more than 10 times that

Recently, a "China's Top 100 Auto Parts in 2005" ranking was released.

According to the appraisers, the original intention of their selection of the “Top 100 Parts” was to increase the brand awareness of well-known companies and promote the strategic reorganization of the Chinese auto parts industry. However, after two rounds of selection, they found that reality is far from their desire.

A Financial Times reporter interviewed found that, as the reviewers said, China’s auto parts companies are far less “powerful” than the ones on this list. Most local companies are not only "anemia" or "oxygen deficiency," but they are particularly worrying. They lack the function of "hematopoiesis."

Fat is not strong

This list was selected and released by two authoritative organizations, the China Automobile Industry Association and the National Bureau of Statistics' Industrial Transport Statistics Division. Jiang Lei, chairman of the association, introduced that the only basis for their ranking is an indicator of the company’s sales revenue.

What distressed the selection experts was that they could not include some of the indicators commonly used by foreign companies in the selection process, such as profit, social contribution, and social responsibility.

For example, if profits are used, many companies will be swept out of this list. The reason is that many of the companies on the list appear to have high sales, but they have almost no profit, and many companies are still at a loss.

As for other indicators, the reviewers also did not consider listing them because "Chinese companies are still far from these."

According to reports, this year's selection, in addition to local companies and joint ventures, the foreign-owned enterprises will be included in the rankings for the first time. The two joint ventures and sole proprietorships were added together, and foreign companies occupied 54 of the “top 100”. This has led to new discoveries: foreign-invested companies have accounted for half of China's auto parts industry.

Shen Ningwu, deputy secretary-general of the China Association of Automobile Manufacturers, believes that foreign-funded enterprises occupy the mainstream of China's parts and components industry, indicating that local companies have encountered great competition challenges. The fact that local companies are big but not strong and “fat” and not strong will further widen the gap between Chinese and foreign companies.

Is the local parts company really big? Comparing the top five global parts companies with the top five parts companies in China, it is difficult to draw a firm conclusion. Taking the sales revenue in 2005 as an example, the world's largest Bosch company is US$49.759 billion, and China’s “top 100 parts suppliers” ranks Wanxiang Group as RMB 25.1248 billion.

According to incomplete statistics, compared with the world’s top 100 auto parts suppliers, the sales revenue of China’s “Top 100 Parts” is more than 10 times that. In addition, in addition to the general lack of independent development capabilities, as the host plant down the cost of procurement every year, the company's profitability space is shrinking, the living environment is poor.

Worries about "grass"

A southern parts and components company is famous on the list of "top 100 companies." "Financial Times" reporter interviewed the company's boss, but learned that he was worried. Its main customers are home-foreign joint ventures, and they will soon launch their own similar product support factories. This matter directly threatens the survival prospects of this parts and components company.



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