Chinese Opportunities and Challenges under the Global Purchasing of Parts and Components


The rapid growth of the Chinese auto market has attracted worldwide attention. It is estimated that in 2010 China's auto production and sales will exceed 12 million vehicles, and by 2015 it will be expected to exceed 16 million vehicles, becoming the world's largest automotive consumer. The rapid growth of the vehicle market has also driven the development of the auto parts market.

According to statistics, we have more than 10,000 auto parts production companies with an annual production value of more than 650 billion yuan. With the deepening of global economic integration and the intensified competition in the automotive industry, vehicle manufacturers are increasingly inclined to master the production of several key components, and follow the principles of QCDD or QCDS for standardized general parts (Quality quality, Cost, Delivery Delivery, Design Design, or Service Services are selected globally and global resources are used to implement global procurement. Global procurement of auto parts has become the trend of the automotive industry.

Under the influence of the globalization of the market, the convenience and continuity of the matching have become an urgent need for vehicle companies. Especially in the emerging automobile market, major auto companies have established wholly-owned or joint ventures in the local area. In order to avoid the risk of disconnection between procurement and production, the supply of parts and components is inevitably required to comply with the principle of proximity. This is undoubtedly very important for companies that are increasingly emphasizing the ability of the supply chain to respond quickly. OEMs can make full use of the competitive relationship among parts and components companies worldwide to acquire the latest technology of the market, adapt to fluctuations in exchange rates and batch effects of group purchases, and achieve the best quality, best service, and the most reasonable price when purchasing globally. .

In recent years, relevant state departments have successively introduced various policies to encourage and support the development of auto parts enterprises. On December 20, 2006, the National Development and Reform Commission issued the "National Development and Reform Commission's Circular on the Opinions on the Structural Adjustment of the Automotive Industry." It explicitly stated that support for the development of auto parts industry clusters in the regions with favorable conditions; Cross-regional mergers, alliances, reorganizations, and the formation of large-scale component enterprise groups.

Driven by policies and the entire vehicle market, major multinational companies have stepped up their procurement efforts in China in recent years, and the auto parts industry has also achieved remarkable development in exports. Ford was the first multinational car company to establish a global procurement center in Shanghai, China in 2002. According to Ford Greater China's Vice President of Purchasing, in 2006 Ford’s total purchases of parts and components in China amounted to US$2.6 billion. Currently, the company is seeking a wider range of purchases, including electronic products, castings and forgings. In 2006, Volkswagen AG announced that it will purchase one billion US dollars worth of auto parts from China. These parts will be used in factories in Volkswagen, including Germany, around the world, and General Motors will continue to increase its procurement of spare parts in China. Many companies have set up an international purchasing department or procurement center in China and started to purchase a large number of auto parts products in China.

However, there are still obvious hidden dangers in the rapid development of China's auto parts industry, and the technological content of products and the scale of enterprises are all low. As we all know, China's labor costs have a clear advantage over those of Europe and the United States. A low wage strategy may make China a manufacturing center with low value-added and labor-intensive products. This is very attractive to major auto manufacturers worldwide. of. With China's production of spare parts and the establishment of new global supply chains, the cost savings are considerable. And if we can do a good job of training the labor force and improve the labor productivity of our employees, the advantages of low cost can be further tapped.

Wanxiang Group has firmly grasped both the universal joint and bearing products, and has already achieved strong competitiveness in the international market through large-scale production. Facts have proved that China's parts and components companies need to find breakthroughs in the markets for automotive raw materials, production parts or repair parts, and make the market special and refined.

At present, China's spare parts enterprises are in the second and third-tier suppliers status, and 80%-90% of the export products of many enterprises are for the after-sales service market. There is "low-tech content - low profit margin - low research and development expenses - low technology content". The vicious circle. Under the global procurement environment, on the one hand, we must insist on independent innovation; on the other hand, we need more overseas mergers and acquisitions or joint ventures to seize technological breakthrough opportunities.

China's auto parts companies are numerous, small in scale, low in concentration, serious in disorderly competition, and the overall efficiency of the industry is low. After entering global procurement, some domestic auto parts companies with certain strength will be forced to seek joint reorganization and foreign joint ventures and cooperation. Scale, the ability to increase market risk, and those small-scale, product-free auto parts companies will inevitably be eliminated, and promote the competitiveness of the entire industry.

At present, global auto parts companies are faced with a new proposition, that is, in the new environment of global procurement, how can we more effectively implement procurement supply chain management? Although many researches on procurement supply chain have been applied initially, such as collaborative procurement supply chain and electronic fixed-point timing procurement, all these new procurement methods and procurement methods need to be studied in the real market environment. Demonstration. The automobile procurement supply chain system is huge, but our country has a vast area, it is difficult to exchange supply and demand information, and the logistics cost is high. If the domestic parts and components companies can take advantage of the local market research and combine with the actual situation in China, provide a low-cost, high-sensitivity car zero. The component procurement supply chain model or innovation in the procurement method will greatly increase the market competitiveness of local parts and components companies, and will become the third breakthrough point for Chinese auto parts companies following the cost and technology.

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