A different China has emerged for western parts makers, who no longer see the country as a low-cost source of components. North American suppliers sought footholds in China for reasons that turned out to be the wrong ones. Pressured by U.S. carmakers, they wanted to achieve the “China price,” the then-new global benchmark for low-cost production. Western parts makers put together strategies to import parts from China for North American OEM customers.
But China evolved far differently. Just listening to the suppliers at last month's Shanghai auto show, one could hear executives beginning to sound exasperated about the pressure of trying to meet the demands of customers.
Western suppliers aren't interested in sourcing components from China; they are working flat-out to keep pace with the world's largest market. They can afford to spend little time thinking about China as anything other than a vast market that must be served.
Chinese companies are highly fragmented, with inadequate economies of scale with their lack of size resulting in little R&D capability. But there is an effort underway to consolidate China's supplier industry.
Some Chinese suppliers are trying to strengthen themselves by making acquisitions overseas.
Meanwhile, western companies continue to make investments and acquisitions and form partnerships. Johnson Controls is forming a joint-venture in the city of Changsha to produce interiors for Guangzhou Automobile and Fiat. TRW says it plans to open a technical center in Shanghai in 2013. Michelin recently signed a joint venture agreement with Double Coin Holdings Ltd. to produce tires for cars and light trucks in China.
(credited to supplier business news & analysis)
But China evolved far differently. Just listening to the suppliers at last month's Shanghai auto show, one could hear executives beginning to sound exasperated about the pressure of trying to meet the demands of customers.
Western suppliers aren't interested in sourcing components from China; they are working flat-out to keep pace with the world's largest market. They can afford to spend little time thinking about China as anything other than a vast market that must be served.
Chinese companies are highly fragmented, with inadequate economies of scale with their lack of size resulting in little R&D capability. But there is an effort underway to consolidate China's supplier industry.
Some Chinese suppliers are trying to strengthen themselves by making acquisitions overseas.
Meanwhile, western companies continue to make investments and acquisitions and form partnerships. Johnson Controls is forming a joint-venture in the city of Changsha to produce interiors for Guangzhou Automobile and Fiat. TRW says it plans to open a technical center in Shanghai in 2013. Michelin recently signed a joint venture agreement with Double Coin Holdings Ltd. to produce tires for cars and light trucks in China.
(credited to supplier business news & analysis)
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