Shen Ningwu, deputy secretary-general of the China Association of Automobile Manufacturers, pointed out at the “China Automotive Industry Summit Forum†held at the China Europe International Business School that opened yesterday that the status of the parts and components industry in the domestic auto industry has been on the rise. However, the domestic parts and components industry R&D capital investment is still at a low level.
Shen Ningwu said that China has basically formed a complete system for domestic cars, but it lacks the core technology of the main car assembly and key components, and its supporting market is still dominated by foreign parties. At the same time, parts and components companies generally lack independent research and development capabilities and R&D facilities, and their ability to develop in parallel with the host plant is particularly weak. In addition, due to factors such as price cuts by OEMs, rising prices of raw materials and kinetic energy, high logistics costs, and rising wages, the operating environment of parts and components plants has become increasingly severe, and the low-cost advantages of spare parts in China are being affected.
He also said that although the intensity of investment in R&D capital in the domestic component industry has increased in recent years, it is still at a relatively low level. The annual development investment of auto parts enterprises in China is generally about 1% to 1.5% of sales revenue, compared with 3%-5% or even 10% in developed countries. The investment in the parts and components industry should be 1.2-1.5 times that of the entire vehicle company, compared with 0.3 times that in China. Such a small investment has limited the development and research and development of the company.
Statistics show that after 2000, the proportion of parts and components industry in the entire automotive industry has increased year by year. In 2005, the domestic auto parts industry achieved a total industrial output value of 383.8 billion yuan, accounting for 35% of the total output value of the entire automobile industry. In addition, exports of parts and components have also shown rapid growth in the past five years. In 2005, the total value of exports reached 8.5 billion U.S. dollars.
China Securities Journal
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