How to develop domestic auto parts? What is the reference for the development experience of internationally renowned auto parts companies? Shen Hui, president of BorgWarner, China, a world-renowned auto parts manufacturer, received an exclusive interview with the reporter from China Business News. Shen Hui believes that although the self-owned brand has flourished in China's auto manufacturers, there is still a considerable gap in the independent brands of China's spare parts industry from the technological core and promotion of the industry chain.
Build domestic brands' own brands
At present, there are various defects in domestic parts manufacturers with small scale and low technical content. Shen Hui said that Zhejiang has already produced a number of powerful auto parts production and export companies, such as Xiaoshan Wanxiang, Shaoxing Wanfeng, Wenzhou Ruili, and Taizhou Yinlun. There are hundreds of small and large parts suppliers, but 80%~90% of many companies' export products are for the after-sales service market, and it is difficult to enter the lucrative high-end market. This is mainly caused by the following reasons: On the one hand, due to the existence of a large number of “copypiecesâ€, it is very likely that in the aftermarket, the market will be enlarged, causing intellectual property infringement; on the other hand, many small and medium-sized enterprises are “prosperous†and have not really entered the market. The mainstream market lacks long-term planning.
Not only that, in terms of brand promotion, the investment time and funds of domestic parts and components companies are obviously insufficient. Many suppliers have given up the latter in satisfying the profit before the eyes and investing large sums of profit in brand building and technological innovation. This also exacerbated the problem of bigger parts and components companies.
Take the tire export as an example. According to statistics of the State General Administration of Customs, in 2005 China's cumulative export of tires exceeded 200 million, but anti-dumping incidents encountered abroad also occurred frequently. As China's tires lack an independent brand, some domestic tires that have obtained US DTO certification and European ECE certification are hardly recognized by consumers.
Another important flaw in the domestic spare parts industry is inadequate resource integration. In foreign countries, parts and components companies occupy an important position in the automotive industry, and the domestic situation is that OEMs are above the suppliers. This requires the relevant government departments of the Chinese auto industry to increase the integration between suppliers and OEMs.
In addition, in the independent development, there is a huge gap between domestic parts manufacturers. Shen Hui told reporters that the state encourages self-development to speak of the entire vehicle, and does not involve parts and components. In fact, there is no spare parts vehicle will not have its own brand.
“China has not really discussed its own brands of parts and components. In terms of this industry, there must be a truly independent brand of parts and components companies. Only in this way will there be automakers of their own brands that truly belong to the Chinese themselves.†said Shen Hui. "Parts and components companies deserve more attention. There is now almost no prominent domestic brand of spare parts. This is a big problem."
However, Chinese parts companies are also facing a series of problems in developing their own brands. The first step in developing independent brands is to learn from the outside world, but now many people are talking about multinational companies failing to bring real technologies to China.
In addition, China’s protection of intellectual property rights is still lacking. Any independent research and development product of a company, if not effectively protected and cloned by its opponent, simply sells at a cheaper price after plagiarism, which leads to no one to dare to do originality, thereby stifling independent innovation. Shen Hui admits to reporters: “The reason why multinational companies dare not to do core R&D in China is to worry about technology leakage. To build an independent brand, it is necessary to truly transfer the leading technology to China. Clearing the two major roadblocks of talents and intellectual property rights is a top priority. ."
The Enlightenment of BorgWarner
Founded in 1880, BorgWarner, its products are mainly used for engines and transmission systems. According to the latest results, in the first three quarters of 2005, BorgWarner’s sales were US$3.2458 billion, up 23% year-on-year; net profit was US$175 million, a year-on-year increase of 16.2%. In 2005, BorgWarner proposed the idea of ​​a threefold increase in global business in the next eight years. In the global auto market downturn, suppliers generally suffered from shrinking profits. How did BorgWarner rise against the trend?
In response, Shen Hui, president of BorgWarner China, attributed the company’s development mainly to several aspects. First, based on innovative technologies, technology is the most important. Only with technology, it is possible to avoid being involved in price wars and cheaper than anyone else. For example, BorgWarner's dual-clutch technology is unique in the world, which makes it win the initiative in the market.
Second, seek healthy growth. Taking the automotive industry as an example, people's understanding of growth seems to be based only on sales growth and capacity expansion. However, even though profits are falling, it is difficult to achieve continuous development. Healthy growth requires a certain profit margin. Health growth, which includes profits and new technologies, is the most important part that should attract the attention of Chinese counterparts.
Again, the global diversity of customers. Many parts companies rely on a company, and their fate is completely in control of the customer's every day. In BorgWarner, the largest customer, Ford, is only accounting for 8% of its sales. Other customers are below 8%. This way, it can reduce risk and sell good new technology to both. More customers reduce costs and increase sales. On the other hand, Delphi, which filed for bankruptcy protection, has more than half of its customers being General Motors. This not only increases the risk, but it also easily breeds doubts when other OEMs cooperate with it.
Borgwarner proposed that the global business growth in the next eight years is three times, and also put forward the idea that China's business will grow 8-10 times in the next five years. As early as 1993, BorgWarner set up a joint venture company with Beijing Jeep to supply the transmission system products. Today, BorgWarner China is preparing to establish its sixth branch, each with an investment between 10 million and 25 million US dollars.
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