Bosch, a leading German auto parts supplier, is set to triple its sales in Asia by 2015, aiming to tap into the region's booming economic growth. With annual sales exceeding €7 billion in Asia this year, the company has announced plans to further invest in key markets such as China, India, and Thailand. At the opening of its Seoul branch, Bosch Group Manager Fahrenheit Bach highlighted that the company expects to generate over 22 billion yuan in profits from the Asian market, which he described as one of the world’s most promising growth areas.
In parallel, Delphi Corporation, another major automotive components manufacturer, has also increased its footprint in China. On October 25, it announced the construction of a new air-conditioning compressor plant in Suzhou, capable of producing 550,000 units annually. This marks a significant step in Delphi’s expansion, with total investments in China surpassing $500 million.
However, the growing presence of multinational automakers is putting pressure on local Chinese auto parts companies. Zhang Boshun, secretary-general of the SAIC Committee’s Market and Trade Commission, warned that the evolving strategies of global players are squeezing the space for domestic suppliers. He emphasized the need for Chinese auto companies to take greater responsibility in developing their own parts industry and to build a “zero-to-zero relationship model†for mutual growth.
Zhang pointed out that China’s auto parts sector still lags in investment intensity. While foreign counterparts typically invest 1.2–1.5 times the amount of整车 (whole vehicle) manufacturers, China’s investment remains below 0.3 times. Additionally, annual R&D spending in China’s auto parts industry is only 1–1.5% of revenue, compared to 3–5% in developed countries and even up to 10% in some cases.
Zheng Xinli, deputy director of the Central Policy Research Office, stressed the importance of controlling key components internally. He urged vehicle manufacturers to develop their own parts subsidiaries through a holding model. Chery, for instance, has successfully established over 30 controlled parts companies and developed engines with independent intellectual property. Zheng believes that large state-owned Chinese automakers should learn from such models.
Other successful examples include Yuchai, Weichai, Wuxi Oil Pump Nozzle, Third Ring, and Ningbo Deye, whose development experiences offer valuable lessons for both vehicle and parts manufacturers. Zhang Boshun emphasized that auto parts companies must focus on innovation, especially in critical areas like high-performance engines, automatic transmissions, and electronic control systems, to gain a competitive edge.
In terms of production and supply methods, global auto parts industries have undergone significant changes, moving toward modularization and “installation-ready†assembly. For example, Delphi has integrated 140 components from 35 suppliers across six countries into cockpit modules, reducing delivery time to just 120 minutes. However, China’s auto parts industry is still in the early stages of modular supply development.
Major global automakers have restructured their supply chains, shifting from multiple suppliers to a few system-level suppliers, and from single-component procurement to module-based purchasing. This has led to a more centralized, pagoda-like structure, where top suppliers manage the entire supply chain. Wanxiang Group, China’s largest auto parts manufacturer, has taken a bold step by acquiring AI Corporation, a U.S.-based supplier serving GM, Ford, and Chrysler. This move has expanded Wanxiang’s presence in the U.S., with overseas sales expected to reach 6 billion yuan.
Lu Guanqiu, chairman of Wanxiang Group, believes that mergers and acquisitions have allowed the company to embed itself directly into the core of the global automotive supply chain, securing access to key technologies, procurement networks, and talent.
Despite the potential, China’s auto parts industry still faces challenges due to its fragmented nature. As of 2006, there were around 5,000 large-scale parts companies, but only 15% had monthly sales exceeding 50 million yuan. Zhang Boshun argues that without scale, it is difficult to compete globally. He urges auto parts companies to accelerate mergers and acquisitions, aiming to become reliable partners for full-vehicle manufacturers.
The industry includes various types of companies: large auto group subsidiaries, state-owned factories, expanding private enterprises, and small-scale operations lacking advanced management and quality assurance systems. Analysts from Han Ding Century Consulting suggest that joint ventures and regional reorganizations can help form geographically advantageous clusters, such as the Shenlong and Dongfeng Motor Industry Clusters.
Zheng Xinli also noted that in developed countries, the parts industry often operates independently from整车 production. Some nations focus solely on parts manufacturing, yet maintain a highly developed industry. He advised struggling vehicle companies in China to consider shifting toward parts production to remain competitive.
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