The way out for parts and components companies is internationalization

In the recent Asia-Pacific Automotive Summit and China Manufacturing Internationalization Forum, Li Dakai, chairman of Shaanxi Fast Group, proposed that internationalization is the only way for Chinese auto parts companies to become stronger and bigger.

China has become the world's car competition stage Li Dakai said at the forum that the automaker's auto parts production rate has continued to decrease and global procurement has been implemented. According to incomplete statistics, due to global procurement, the cost per vehicle in the United States dropped by approximately 1,200 U.S. dollars, Europe dropped by approximately 640 U.S. dollars, and Japan by approximately 540 U.S. dollars. From the outsourcing rate of some car companies, we can see that the best Japanese Toyota company has achieved 78%. In the past two years, it has achieved the world's best production. After global production automobile manufacturers have laid out globalized production, the corresponding auto parts companies are also deploying their own resources to the world.

At present, China has become the stage for global car companies to compete. After rapid development, China has become one of the most important overseas markets for multinational car companies. Taking passenger cars as an example, the cross-border car companies’ market share in the Chinese market has reached 70%. According to their plans, future production capacity will further expand. The output of GM, Volkswagen, and Nissan in China has exceeded 25% of global production, especially GM has reached 28.1%, Volkswagen has reached 26.8%, and Nissan has reached 20.6%. There is no doubt that China has grown into one of the most important automotive markets in the world. GM produced approximately 8.4 million vehicles in 2010, of which 2.35 million were in China; Volkswagen produced 7.27 million vehicles, of which nearly 2 million were sold in China. This is a very amazing number. At present, more than 70% of the world’s top 100 auto parts companies have already started business in China, and more than 1200 foreign-funded enterprises have been producing parts and components.

Against this background, the pace of Chinese car companies going out is gradually accelerating. In particular, the growth in recent years is obvious to all. Although it was affected by the world economic crisis in 2009, it quickly resumed high-speed growth. China’s auto parts exports are also the same, and the pace of import and export is accelerating. In the “going out” strategy, overseas local production, including Chery, Great Wall, FAW, CNHTC, Futian, etc., all perform well; R & D institutions are SAIC, Chang'an, JAC, youth, etc.; overseas mergers and acquisitions are Geely, BAIC, BYD and so on.

In the future, the road to internationalization will become more stable. As the pillar industry of the national economy, the automobile industry has become a top priority. Li Dakai said that our number is gradually increasing, but it is still much worse. Strong parts and components are strong in the automotive industry. Entering the international market can force domestic companies to rapidly increase their management, quality, and technology.

It is understood that most of China's indigenous products are labor-intensive and material-intensive. High-tech products are very uncompetitive, such as electronic fuel injection systems and automatic transmissions. The entry into the international market can effectively prevent multinational corporations from monopolizing the domestic auto industry and the auto parts industry. Li Dakai believed that in the forum, there are several ways to enter the international market. The first can enter the global automotive industry's procurement system, the second can be through joint ventures, and the third can be in cooperation with foreign scientific research institutes to overseas production. The fourth can be Mergers and acquisitions. At present, the global auto market is relatively sluggish. For the auto parts industry in China, it means that there will be more opportunities to go out. In terms of strengthening industrial integration and industrial clusters, they can exert scale advantages and overall effects to reduce costs. In addition, specialization can be strengthened to promote cooperation between innovation and zero. It can also improve the industrial supporting system and form a strategic alliance with a leading role in spare parts enterprise groups and division of labor.

To adhere to the path of internationalization, we must adhere to innovations in technology, management, and models. Li Dakai proposed that investment in R&D can be increased, the potential of technicians can be tapped, the situation of technology dependence can be eliminated, and international advanced management systems can be introduced to transform the mode of economic growth.

Through the establishment of strategic partnerships with vehicle companies, we will actively follow up, carry out simultaneous development and system development, and lead the technological progress of parts and components companies. In addition, it can also be involved in advance, advance development, and promote the technological advancement of vehicle companies. It is also possible to build mutually beneficial long-term win-win partnerships and join forces to withstand the market impact of multinational parts and components companies. Through the introduction of international standards, the establishment of first-class quality management system, for example, the introduction of QS9000, ISO9000 and other international quality management system, strict implementation, to ensure product quality stability and reliability. It is also possible to introduce and establish a talent team to enter the international market, foster competitive incentives, and strengthen informationization to establish a modern, efficient, accurate, stable, and secure information management system. Establish and improve the information network platform and timely collect and control the market dynamics at home and abroad.

Internationalization should be an international standard for products, performance, quality, and service that meet international standards, not how many products to export and how many cars to export. Li Dakai believes that internationalization is to achieve international standards, and second is to consider selling products abroad. To expand the foreign market, establish our factories abroad, and establish our service system abroad. Only in this way can our internationalization ability be solid.

At present, there is still a certain distance between China's spare parts industry and the entire vehicle industry compared with the international advanced level. Li Dakai specifically proposed that Chinese local auto companies must establish firm confidence and go international in the near future. Whether it is a Chinese vehicle company or a Chinese parts and components company, the road to internationalization in the future will become more and more steady and broad.