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According to statistical data released by the relevant departments, up to now, 70% of the top 100 auto parts suppliers in the world have come to China to carry out business. There are more than 1200 foreign-funded enterprises that manufacture automotive parts and components in mainland China. In 2006, the sales revenue of auto parts enterprises nationwide was 403.5 billion yuan, of which foreign-funded (controlled or wholly-owned) component products accounted for most of the market share, and domestic component products accounted for only 20% to 25%.
Since the implementation of the "Administrative Measures for the Import of Auto Parts That Constitute the Characteristics of Complete Vehicles" in April 2005, the enthusiasm of foreign-funded parts and components companies investing in China has increased. According to statistics, there were more than 90 foreign-funded parts and components companies that signed up for investment and cooperation in China that year, and the agreement investment amounted to 4 billion US dollars, which was 3.2 times that of 2004. Among them, there are many transnational giants such as Delphi, Denso, Sumitomo, Dana USA, Valeo of France, and Fujitsu Electronics of Japan. Two years later, this boom still exists, but there have been two noticeable changes.
1. From sole proprietorship to joint venture
In the first half of 2006, the total investment of multinational companies producing auto parts in China reached 13 billion yuan. The investment areas involved engines, chassis, gearboxes, and automotive electronic components. Among them, more than 90% of new projects belong to wholly-owned enterprises.
In 2007, foreign-funded parts and components companies changed their preferred investment model, and they have concluded the need for a joint venture with local Chinese companies in their two-year operating practices.
2. Manufacturing with R&D support
To quickly enter the Chinese auto parts market and reduce product costs, we must achieve localization of research and development. In the face of China’s rapidly growing auto market, international auto parts giants are using subdivided localization methods to consolidate their existing competitive advantages, including providing more vehicle manufacturers with more vehicle prices as their prices continue to decline. Parts product technology solutions. The proposal and implementation of these programs are basically based on foreign capital established in China's domestic R & D center.
As a result, China's domestic parts and components companies that have previously had a cost advantage will face severe challenges.