Global Parts Industry Transfers to China
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According to the relevant commitments made by China's accession to the WTO, after July 1, 2006, the tariff rate of China's entire vehicle tariff is 25%, and the tariff rate for parts and components is only 10%. This difference of 15% in tax rate will become an "economic lever" to guide multinational corporations to implement local production of parts and components.
Transnational giants are coming
According to the international operating standards, the scale of the vehicle and parts of the auto industry should be 1:1.7. From this, it can be inferred that the huge space for development has become the original driving force for global parts companies to build China. At present, multi-national auto parts companies have established numerous joint ventures or wholly-owned enterprises in China to share the achievements of high growth in China's auto industry. The major component giants in China are not simply manufacturing, but increasingly focus on R&D and have established technology centers in China.
Delphi, the largest component supplier in the United States, has 14 parts manufacturing plants in China with a total investment of more than 450 million U.S. dollars and produces more than 40 categories of products. Bosch GmbH is one of the first component giants to enter China. It has set up ten representative offices, four trading companies and a trade representative office, seven wholly-owned enterprises and ten joint ventures in China. As Japanese automakers marched into the Chinese market in large numbers, the parts suppliers also followed the footsteps of the automaker and transferred their production bases to China.
Promote low-cost transfer
From a global perspective, international auto parts companies are moving toward an independent, large-scale and strong development. Delphi and Visteon were separated from General Motors and Ford Motors, respectively. They changed from a component manufacturer supplying purely to a car company to a global component company. The huge development prospects of China's domestic auto market and the competitive advantages of low-cost products have made it feasible for foreign parts manufacturers to transfer production bases to China.
According to statistics, the number of foreign-invested parts and components companies in China is close to 500. Although these companies are still mainly to meet domestic demand, with the expansion of their production scale and R&D capabilities in China, products are exported to the international market. The scale is also growing.
Squeeze the international procurement bus
At the same time, under the pressure of reducing procurement costs, international procurement of multinational companies will turn their attention to China. At present, world-renowned automobile manufacturers have set up their global procurement centers in China, and multinational companies currently have more than US$5.5 billion in spare parts purchases in China. Many domestic auto parts manufacturers, such as Wanxiang and Fuyao Glass, have also been squeezed into the global procurement of multinational companies.
According to a market research, with a large number of major auto parts suppliers in China such as Delphi, Visteon, TRW, and Lear investing in China, China will increase its existing parts supply industry by 165% in 2010. Its share, reaching a scale of about 800 billion yuan, has become the largest investment sink in the world.