Parts will become the main battlefield for Chinese automotive technology innovation
December 30, 2022
The Chinese economy has entered a “new normal” of decelerating growth. The growth rate of the auto industry is also declining. The development of auto parts companies has been hit by unprecedented shocks and presents many problems. Of course, the crisis is organic, and some powerful parts and components companies use the results to prove that as long as the early planning, research and development, and real transformation, can still find new opportunities for development.
I. The automobile parts industry is "critically organic"
1. The overall profitability has declined, but companies with higher technological content are still growing.
The profitability of China's auto parts industry has declined in the past two years. This is the reality we have to admit. However, we also see that the profitability of parts and components companies with relatively high technological content is increasing.
According to statistics on the annual reports of 71 listed component companies in 2013, the cumulative operating income was RMB 334.9 billion, a year-on-year increase of 14.17%; the net profit was RMB 19.1 billion, an increase of 11.32% year-on-year, and the average net profit rate was only 6.05%, a year-on-year decrease of 11.55. %. The average net profit rate in 2012 was 6.84%, and the average net profit rate in 2011 was 7.53%. From the data of the past three years, it can be seen that the profitability of parts and components companies is continuing to decline.
One of the factors of continuous decline is that independent auto parts companies mainly support the commercial vehicle industry, while the commercial vehicle industry has only grown last year for the past three years, and has declined sharply in the remaining two years. From the development and changes of China's truck industry in the last decade, there are five years of high growth and five years of negative growth. The decline in the commercial vehicle industry has seriously affected the parts and components industry.
2. Imports of key components increased, and exports of low-level products suffered setbacks.
According to the National Customs data, from January to June 2014, the total amount of auto imports was USD 48.010 billion, and the export amount was USD 40.23 billion, which was an increase of 28.28% and 7.33% year-on-year respectively. National auto parts imports were US$17.726 billion and exports were US$30.913 billion, an increase over the same period of last year.
Although the export volume of auto parts has increased, the import volume of key components such as automatic transmissions, controllers, and electronic fuel injection systems has increased even more. What is more serious is that China’s exports of parts and components are mostly based on the aftermarket maintenance market. In recent years, several countries have launched “double reverse” (anti-dumping, subsidy) investigations on Chinese auto parts, and the European Union has adopted tire labeling methods. The export of related parts and components in China caused a significant impact.
3. The rapid growth of foreign capital poses a severe challenge to the independent component companies.
At present, foreign auto parts companies are still growing rapidly in the Chinese market. They are full of confidence in the future of China's market and continue to maintain a leading position in technology, while autonomous products are still at a disadvantage. Bosch, Delphi, Foglia and many other foreign-funded enterprises have formulated plans to double their growth in China.
After years of hard work, foreign auto parts companies have firmly occupied the high-end market for Chinese autos with their technical advantages. In addition, in recent years, many foreign-branded parts and components began to drastically reduce prices and squeezed out the low-end market that originally belonged to autonomous parts and components. This makes it increasingly difficult for independent component companies to survive. Some new products that have been invested heavily, such as ABS and EFI systems, have been suppressed by the price reduction of foreign products, and promotion is very difficult.
4. The trust of auto companies in auto parts companies has declined, and there has even been discrimination.
The contradiction between the entire automobile company and the parts and components companies in China is a long-standing contradiction between the zero and the whole. In particular, Chinese and foreign-invested parts and components companies have been treated differently, which has further exacerbated the auto parts companies. For example, the settlement standards are different internally and externally, do not give the opportunity to participate in fair bids, and do not pay domestic product companies to pay for the development of products. These discriminatory practices in the supporting process of vehicle manufacturers, especially autonomous vehicle manufacturers, have caused many local parts and components companies to Cold heart, helplessness.
An important measure for the transformation and upgrading of self-owned brand vehicle companies is to upgrade the supply chain and select a large number of foreign-branded parts and components. More and more self-owned vehicle companies are closing their doors to local components companies.
To cultivate a strong parts and components industry requires the awareness of the entire vehicle company. The destiny of self-owned auto companies is closely related to the development of the local parts and components industry. If China's auto companies and parts and components companies still have such a zero-relation relationship, the Chinese auto industry in the future will have a serious crisis.
5. Parts companies lack policy support.
It is an indisputable fact that China’s auto parts industry lacks policy support. At present, China's parts and components enterprises are unorganized and disorderly and are in a state of complete fighting. It is completely free competition. The positive role that the government should play is basically invisible.
The policies introduced in recent years are basically aimed at vehicles. The most typical is new energy vehicles that are strategically emerging industries in the country. Subsidies for large sums are allocated to vehicle companies. It is difficult for enterprises such as batteries and motors as core components. Get support.
At the symposium on China's auto industry for returnees held by overseas Chinese, returnees experts unanimously appealed that the development of parts and components companies has become the key to the strength of the Chinese auto industry. The government can continue to stimulate and encourage the development of vehicle companies and balance it. Tilt to parts companies to help China's parts industry develop better.
6. Single investment channels, technical innovation lack of strong financial support.
China's spare parts companies have a single investment and financing channel, and they have access to a single source of production factors. In recent years, some local governments have freely given away all kinds of production factors such as land and funds for vehicle companies. However, they have rarely heard support for parts and components companies.
In the case of a slowdown in the growth rate of the auto market and the difficulty of survival of parts and components companies, some companies have reduced their R&D investment in order to reduce costs by keeping the market. The R&D investment of auto parts companies in China is insufficient, and R&D investment accounts for 2%~3% of sales revenue. The proportion of R&D investment of auto parts multinational companies such as Bosch is over 5%, and some are even as high as 10%. Without sufficient investment in innovation, the gap will only increase.
7. There are major problems in institutional mechanisms and the space for reform remains large.
The reform of the institutional mechanisms of China's spare parts enterprises is relatively large, and the reform dividend still exists. Some veteran parts and components companies are now operating very difficult, due to the rigidity of institutional mechanisms, sticking to conventions, failing to make timely transitions, resulting in marginalization or even elimination.
However, a large number of privately-owned and mixed-ownership parts and components companies are relatively flexible in their institutional mechanisms. Many companies are sensitive to the market and have strong adaptability. They are currently in a good state of development. Some ideal and pursuing private-owned and mixed-ownership parts and components companies have clear strategic goals and clear planning, and they have the determination and perseverance to make “a hundred-year-old shop”.
Obstacles to the system are also reflected in the alliance between companies. China's auto industry has a lot of alliances, and the combination of production, education and research is implemented for many years. However, many scientific research achievements have not been transformed and many alliances have ended without results. Of course, there are good examples, such as the Automotive Lightweight Innovation Alliance organized by the China Automotive Engineering Society, and the large-scale auto parts park in Hangzhou Bay New Area in Zhejiang Province, which have achieved good results.
8. There is a shortage of talent, but a number of leading talents in technological innovation have emerged.
During the Beijing Auto Show this year, we once conducted a questionnaire survey on auto parts companies. The survey shows that the lack of talent leads to the lack of technology in auto parts auto parts companies, which is the main reason behind the decline of self-owned brand auto companies. In terms of specific types of talents, engineers and management personnel received the highest votes, followed by sales personnel and skilled workers. None of the companies considered that “there is no shortage of talent.”
However, we are pleased to see that in the parts and components industry, a group of leading talents in technological innovation are emerging, especially college professors and researchers from universities and colleges. They take the lead in innovating and studying key components and key technologies. Bring hope to the parts industry. For example, Prof. Song Jian from Tsinghua University, who led Suzhou Green Control's R&D AMT, and Professor Xu Xiangyang of Beijing University of Aeronautics and Astronautics, who played a major role in the Shengrui 8AT innovation project.
Second, 100 parts suppliers' gratifying changes
It is undeniable that although China's auto parts industry still faces many problems like this, we cannot afford to concentrate on it and we should also see the growth and progress of auto parts companies. For example, China's “100 Excellent Parts Suppliers” are the leaders of their respective sub-industries, leading the development of their respective sub-sectors. Some of them have successfully achieved transformation and upgrading, some have achieved the ultimate in specialization, some have achieved leapfrog development after the implementation of overseas mergers and acquisitions, and some have entered the supply chain system of multinational automotive companies, and some are at the core of the key Parts can already be wrenched with cross-border parts and components companies, and some are making strides on the road to energy conservation and emission reduction.
1. Great progress has been made in the development of precision and specialization. Practice has proved that taking the fine, specialized, new and special roads is the only way out for parts and components. The parts and components companies will be champions in singles, and if they have expertise and a dedicated team, they can achieve the ultimate in one product. Longcheng Precision Forging, for instance, is a private enterprise located in Wujin, Jiangsu Province. It produces only one claw claw of a motor, but it accounts for 33% of the global OEM market. The global OEM market is 180 million, and Longchengjing Forging has achieved 60 million, becoming the preferred supplier of Bosch, Valeo, Remy and other motor companies.
2. Obtain international advanced technology through acquisition. For example, Junsheng Electronics has become the exclusive supplier of battery management systems for BMW electric vehicles through the acquisition of Puri, and it has also become a supplier of driver operating systems for luxury brands such as Audi, BMW and Mercedes-Benz, allowing luxury brands to imprint Chinese imprints. As a result, Junsheng Electronics has achieved a leap-forward development and its sales revenue has reached a scale of RMB 7 billion.
3. The right to speak in a subdivided industry increases, and international competitiveness increases. In the field of automotive wheel hubs, Zhejiang Wanfeng Aowei Turbine Co., Ltd. and international companies such as GM, BMW, and Ford have entered an in-depth strategic cooperation stage, not only being GM's, BMW's global strategic supplier, and Land Rover's exclusive supplier in China. Last year successfully entered the Japanese Toyota system. In the field of airbags, in the past few years, Jinzhou Jinheng Automotive Safety System Co., Ltd. has succeeded in breaking through the suppression of multinational competitors such as Autoliv, Tianhe, and Gaotian, and has entered the support of multinational car companies such as Volkswagen, Peugeot and Citroen. system. In addition, there are many local companies that have become global sales leaders in the subdivided areas. For example, in the field of damper piston rods, the Fujitsu Group, the Far East Drive in the field of transmission shafts for commercial vehicles, and Fast in the field of commercial vehicle transmissions.
4. The transformation was successful and the products were upgraded. For example, in the past few years, Bohai Piston, the leading company in the piston field of commercial vehicles in China, has also successfully achieved expansion into the passenger car market. It not only established in-depth cooperation with its own brands such as Geely, Chery, BYD, JAC and Changan, but also successfully entered the supporting system for European and American car companies. And with its excellent quality, it has won the favor of the high-level procurement department of the German Volkswagen Group. In 2013, the company supplied bulk quantities for the German public; in 2014, it passed the VDA 6.3 of Daimler-Benz AG with a score of 91.4 points, and became one of the four largest automobile systems in the world by Daimler-Benz. A-level supplier. In addition, a large number of up-and-coming youngsters with large growth potential have emerged. For example, Kunming Guiyan Catalyst Co., Ltd., through years of research and development in the automotive exhaust gas purification three-effect rare earth-based catalyst, has now successfully entered the German Volkswagen's supporting system, and Longxi Petrochemical entered the vehicle urea product development several years ago. At present, it has occupied 70% of the market share in vehicle urea.
5. Breakthroughs have been made in key components and major changes have taken place in the innovation model. In recent years, local component companies have made important breakthroughs in key and core product areas such as automatic transmissions. Fast's automatic transmissions for commercial vehicles have already begun to support small batches in the field of buses and terminal tractors. The 8AT developed by Shandong Shengrui Drive after 7 years of research and development has entered a critical stage of industrialization. The mass production of the 8AT will not only shake the right of foreign investors to speak in this field, but will also have a profound impact on the development of China's autonomous automatic transmission industry.
We are even more delighted to see that today's domestic parts and components companies are no longer focusing solely on scale, but are paying more attention to product quality; they are no longer just satisfied with the increase in sales revenue, but pay more attention to the quality of their operations; they are not just focusing on individual products. Competitiveness, in turn, places greater emphasis on the competitiveness of the entire system. This means that the extensive mode of operation in the past has gradually been abandoned.
Third, auto parts are the main battlefield for automotive technology innovation
Today, the situation of China's auto parts industry can be described as "an organic crisis." The industry predicament that we face is very serious, but the huge and diversified market demand, the changing industrial structure, and the opportunities for various mergers and reorganizations in the global market have made us not lose the opportunity to break through.
In the current development trend of China's auto market, I believe that the main battleground of China's auto innovation and development in the future is in auto parts. Parts and components are the basis of the automotive industry. The vehicle technology is derived from the technological innovation of parts and components. The parts and components companies are the core parts of the core technology of the vehicle companies.
At present, the integrated innovation capability of the vehicle has reached a relatively high level, and the development level and innovation capability of the components have not kept pace with the vehicle. This provides opportunities for innovation and development in the current and future automotive parts market. This opportunity is created by the market and will inevitably be determined by the market. In the state where the market determines the allocation of resources, private enterprises and mixed-ownership enterprises will be the main forces to seize this opportunity. These companies can not only seize opportunities but also turn opportunities into capabilities. I am tempted to think that their internationalization ability will rise beyond imagination. Innovation in both new energy and the Internet will be beyond imagination.
Shenyang Zhongda Huanxin Refrigeration Technology Co., Ltd.
