The auto parts sector is a critical component of the automotive industry, providing over 70% of its profits and serving as the backbone for independent innovation within the sector. However, in the Chinese auto parts market, foreign-invested firms dominate, controlling more than 75% of the market share, particularly in core areas. Local companies, which largely depend on state-owned brands, are encountering significant developmental hurdles.
Recent financial data from the top 20 listed auto parts companies in China shows mixed results. While most of these companies saw revenue and profit growth in the first three quarters of this year, the overall figures tell a different story. Total revenue dropped 3.7% year-over-year to 168.85 billion yuan, while net profit fell nearly 20% to 9.649 billion yuan. The average net profit margin decreased to 5.7%, a drop of 1.1 percentage points compared to last year.
Xu Changming, Director of the Information Resource Development Department at the National Information Center, noted that as the domestic economy slows and consumer spending contracts, foreign-funded parts companies are not only maintaining their high-end product segments but are also aggressively expanding into lower-cost markets. This puts local companies at a distinct disadvantage.
Currently, due to the weak foundation and limited comprehensive capabilities of Chinese auto parts manufacturers, they primarily serve self-owned brand carmakers. This narrow focus makes these firms vulnerable when sales of self-owned brands falter. Additionally, domestic automakers have been increasing their reliance on foreign auto parts to enhance vehicle quality, further squeezing domestic suppliers.
As stated by someone from the Automotive Industry Branch of the China Council for the Promotion of International Trade, China's auto industry began with joint ventures. Consequently, European, American, Japanese, and South Korean multinationals dominate the supply chain. For instance, American car suppliers in China are predominantly foreign-owned, as are 88.9% of European suppliers and 88.5% of Japanese ones. The supply chain for Korean cars is almost entirely closed to Chinese entities. Despite this, self-owned brands have spurred some growth among domestic firms, with 52.8% of selected suppliers having foreign investment. However, the loose ties between domestic firms and the broader automotive industry make it challenging to establish robust supply chains.
Foreign capital exerts deep control over key sectors like engine management systems, powertrain systems, safety electronics, and fuel injection systems. These areas are nearly monopolized by multinational corporations, leaving most domestic firms relegated to the lower end of the value chain. Statistics indicate that 80% of local companies earn less than 100 million yuan annually, with 90% of their market presence focused on low-end components.
China’s Ministry of Commerce reported in 2010 that foreign-funded enterprises dominate production in critical areas like EFI systems, engine management, ABS, micro-motors, and airbags. Their market share in high-tech fields like automotive electronics and engine parts reaches up to 90%. Companies such as Bosch, Denso, and Delphi hold prominent positions in China's auto parts market.
China’s policy differences between整车and parts industries allow unrestricted foreign investment in auto parts, attracting substantial foreign interest due to the booming market. Recent years have seen more new foreign-owned parts enterprises established than joint ventures.
Major global players like Bosch, Haila, and Faurecia are now supplying local auto companies. Bosch has invested 700 million RMB in a new factory and R&D center in Changsha, focusing on start/stop systems and electronic drive products tailored to the Chinese market. BorgWarner's Beiru system will soon launch a new ignition coil in Ningbo. Delphi Packard Electric Systems has also expanded operations in Chongqing.
Magneti Marelli recently announced a joint venture with Anhui Jianghuai Automobile and Hefei Lingdatang Collective Asset Management to produce exhaust system parts in China.
Industry expert Zhang Zhiyong believes that foreign-funded parts firms have stronger survival rates than domestic counterparts. Given China's vast automotive market, whether through collaboration or direct investment, the sales and bargaining power of local firms will likely weaken, potentially leading to continued profit declines.
Overseas, European and American countries have launched multiple trade actions against Chinese parts companies, including special investigations, anti-dumping probes, and countervailing duties. These measures pose significant challenges for domestic firms, who will continue to face survival pressures.
Bestware Industrial Faucet brings the fine design and high technology together in all areas of the product process beyond Sink Faucet , Commercial Faucet and Commercial Kitchen Faucet. With extensive range of components, we can offer a large selection of both standard Pre-rinse Faucet and custom Basin Tap units as well as flexible combination. Stainless steel is 100% recyclable and is comprised of over 60% recycled material, Bestware faucets are the perfect solution in the commercial and industry for better water quality and the circumvention of the development of deleterious substances and bacteria. No plating, no oxidizing, no rust, lead free.
Industrial Faucet,Industrial Style Faucets,Industrial Sink Faucet,Industrial Kitchen Taps
Bestware Hardware Production Co., Ltd. , https://www.bestwaremfg.com