Why are local parts and components companies collectively falling in core technology?

Foreign-invested companies control the majority of domestic auto parts sales. Auto parts manufacturers with foreign-owned backgrounds account for more than 75% of the auto parts industry's sales. What is even more worrying is that foreign companies account for 100% and 100% of the core and key components in automotive EFI systems, engine management systems, anti-lock braking systems (ABS), micro-motors, and airbags. %, 91%, 97%, and 69%... This is a group of data released by the Ministry of Commerce that the reporter recently noticed. This means that China’s nearly 10,000 domestic auto parts enterprises above designated size can only be a minor supporting role in the “feast” in which China’s auto consumption market is rapidly expanding, especially in the Case of more lucrative profits and higher technical content. In key parts and components, only those who watched others enjoy delicious “big meals”.

After several decades of development, how has China's domestic auto parts companies stepped down in the core and key technology fields? What has our government and business done during this period?

Heavy production capacity discards R&D

A person in the automobile industry who once worked in the former China National Automobile Industry Corporation (hereinafter referred to as the China Automobile Industry Corporation) told the reporter that in the early 1990s, when China developed the sedan industry, it also carried out the localization process of auto parts and cultivated local Automotive parts industry. In the “Auto Industry Industrial Policy” issued in 1994, there is a chapter that specifically addresses the requirements of the localization policy. The document clearly requires that according to the different localization rates of auto industry products, the preferential tax rates for import duties should be established.

In addition, the country has also taken out a certain amount of money from the sales revenue of automobiles to support the development of domestic parts and components company's products, expand its production capacity, and for the first time set off a joint venture among auto parts companies in China. The construction of Shanghai Volkswagen has also led to the development of a large number of car and auto parts supporting enterprises. “China National Automobile Corporation has also launched a program to train 'little giants' in the auto parts industry, and has been vigorously nurturing and supporting a number of leading companies in the industry through the supporting policies for complete vehicles, and the financial support for loan and technology development. At that time, the Changsha Electric Appliance Factory, Siping Instrument Factory, etc.," the automaker told reporters.

However, in the aftermath of market competition, Ebb Tide has received support from the government, but many “little giant” companies are constrained by the limitations of state-owned enterprise institutional mechanisms at the time, coupled with the low level of business management at the time, slow market response, and technology. Insufficient reserves, overburdened enterprises, and other reasons have failed to persevere in the later market competition and have lost opportunities for further development and growth. For example, at that time, the Changsha Electric Appliance Factory, a leading company that was specialized for liberation, Dongfeng, and other commercial vehicle companies at the time, was shrinking in the truck market in the 1990s and the car market was booming. Decline. Instead, a batch of joint ventures, private and military parts enterprises, such as Wanxiang, Weichai, Shuguang Axle, Fast, and a number of auto parts companies, have overcome difficulties and quickly emerged in the rapidly developing auto market.

There is also a group of fortunate domestic parts and components companies that have grown up in the golden decade of the rapid development of China’s auto market because they are backed by large auto group companies. However, companies are satisfied with the pursuit of short-term profits and blindly expand production capacity without simultaneous Strengthen product development efforts. In the past two years when the market was shrinking and adjusting, it was also in a difficult situation due to the lack of upgrading of product technology.

Heavy industry spare parts industry policy is not

Looking back at our automotive industry policy, we have to admit that neither the 1994 version nor the 2004 version of the "Automotive Industry Development Policy" have revealed planning ideas that focus on the entire vehicle and ignore parts and components. Component industry support for independent development. Although the automobile industry policies of these two different periods have all proposed the revitalization of the auto parts industry, there is a lack of strategic and forward-looking planning and design in promoting their development. In the “Automobile Industry and Planning” published in 2009, there was no effective policy support for how to achieve the autonomous development of core components. It urges the entire vehicle company to drive its suppliers to strengthen independent R&D and promote the technological progress of the parts and components industry.

In addition, the reporter learned that in the earliest batch of joint venture parts and components companies, due to the country's investment policy for auto parts, there is no limit on joint ventures. In the latter part of the joint venture, foreign companies that mastered product technology continuously weakened China’s right to speak and diluted its equity during the negotiation of the introduction of new products and technologies. At the same time, more and more foreign-funded enterprises choose to set up factories solely in China. Although this phenomenon has caused the attention of some local governments in China, in the industrial parks of China's Jiangsu and Zhejiang provinces, there were also special regulations that require foreign auto parts companies that are wholly foreign-funded to build factories to export their products. However, this policy quickly took no place. Foreign products entered the local free trade zone and entered the domestic market again.

In 2004, great changes have taken place in China's auto market scale, competitive landscape, and industry technology level. The self-owned brand auto companies face greater challenges in environmental protection, safety, and energy-saving technologies, and the demand for technical support in the auto parts industry is even stronger. However, the revised "Automobile Industry Development Policy" in that year did not promptly upgrade the technology of the local auto parts industry. Loss of opportunity in the development of many core and key components.

The shortage of reserves is besieged by local companies

Nowadays, the technological upgrading of the local parts and components industry is facing more difficulties, and the threshold for entry in the core high-end component technologies is higher: in addition to lack of technical reserves, funds, and late development verification capabilities, there are also patent barriers for foreign technology products, of course. There are also localization of foreign-funded enterprises.

Dong Jianping, deputy secretary-general of the China Association of Automobile Manufacturers, believes that in the auto parts industry in China, as far as safety and environmental protection regulations are concerned, high-tech parts and components markets, such as EFI, high-pressure common rails, and automotive electronics, are basically foreign-owned. The control of parts companies is unlikely to change the market structure in the short term.

Foreign-invested parts and components companies that have the advantages of technology, management, and branding have begun to benefit from the technological upgrading of China's auto parts industry and continue to widen the technological gap with local auto parts companies. Bosch, Delphi, BorgWarner, Valeo and other foreign companies are stepping up their investment in the Chinese market. Not long ago, the Yantai production base of the Delphi diesel engine management system was laid in Fushan District, Yantai, and its commissioning date was almost the same as the implementation date of China's National IV emission standards. “The investment of foreign-invested parts and components companies in China shows that they have an accurate understanding of the orientation of China’s industrial policies and the pulse of industry development,” said Wei Anli, deputy secretary-general of the China Internal Combustion Engine Industry Association.

Wei Anli believes that the main reason leading to the current situation of China's parts and components industry is that in the past we lacked strategic vision in policy guidance and industrial planning. As long as the development direction of the independent parts and components industry can be clearly defined and given effective and effective support, even in today's unfavorable market environment, the goal of independent industrial development can be achieved.

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