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With the rapid growth of the automotive industry, China's auto parts sector is gaining increasing attention. In recent years, the surge in auto parts exports has highlighted the promising future of this industry. However, it remains a fact that although the Chinese auto parts industry is expanding in scale, it still faces challenges such as low technology levels and weak competitiveness. Meanwhile, more multinational car manufacturers are trying to gain control over the parts market, either through full ownership or strategic influence.
As China entered the "Eleventh Five-Year Plan," the question arose: where was the auto parts industry heading? At a recent high-level forum on the development trends of China’s auto parts industry, experts discussed these issues. While there are concerns about potential marginalization in the short term, the long-term outlook for localization remains positive, both domestically and globally.
The development of China’s auto parts industry began in 1953, initially supporting FAW and the Second Auto Company. Since 1978, with the expansion of the automotive industry, the parts sector also experienced growth, gradually improving its technological content. In the 1990s, increased foreign investment and localization efforts further boosted the industry. After 2000, with the booming auto market and new industry policies, the auto parts sector saw significant progress.
Today, the industry is taking shape, marked by the emergence of numerous competitive manufacturers. According to data from the China Association of Automobile Manufacturers, in 2004, the top 100 auto parts companies generated 196.6 billion yuan in sales, accounting for nearly 60% of the total industry revenue. Some companies, like Wanxiang Group, achieved sales of over 26 billion yuan in 2005, showing strong growth.
Experts believe that the industry has moved beyond its previous state of small-scale, low-quality production. It now offers comprehensive support systems for domestic automakers, with some companies even developing and exporting advanced systems internationally. However, the rise of foreign investment poses challenges. Over 70% of the world’s top 100 auto parts suppliers have operations in China, and many are shifting from joint ventures to sole ownership, aiming for market dominance.
Despite this, Shen Ningwu, deputy secretary-general of the China Association of Automobile Manufacturers, believes that while foreign firms may dominate key technologies for a while, the long-term trend favors localization. This process could lead to industry restructuring, helping to eliminate inefficiencies and improve overall competitiveness.
For Chinese auto parts companies, adapting to localization is crucial. They must actively participate in mergers and reorganization, reduce dependency on vehicle manufacturers, and build a stronger, independent industry. Exporting is also key. By 2010, China’s auto parts exports are expected to reach between 35 and 40 billion U.S. dollars. However, success requires moving beyond low-value products to higher-value components, transitioning from after-sales to OEM, and managing exports more systematically.
In conclusion, while challenges remain, the future of China’s auto parts industry lies in innovation, adaptation, and global integration. With the right strategies, it can overcome risks and achieve sustainable growth.