This article starts with the data of China's auto parts exports, and points out that the export of parts and components has become the main force of China's auto exports, and analyzes the direction and categories of China's auto parts exports and four major export channels. On this basis, the five major competitive advantages of China's auto parts exports are discussed in detail: low-cost, foreign investment, economies of scale, late-coming advantages, and tariff advantages. Finally, five issues that restrict the export of auto parts in China are analyzed: low technical content of export products, quotations, orders, sunk costs, and trade barriers, and recommendations are made.
China's auto parts export status
1: The main data
The following is statistics on the export value of auto parts and all automotive products in China since 1991 (see Table 1).
It is not difficult to see that in the past 15 years, the export value of China's auto parts has continued to grow, and it has been growing particularly fast since the accession to the WTO. The annual growth rate is about 3%. At the same time, the proportion of export value of auto parts in the export of all auto products has also increased year by year, reaching more than 8% in 25 years, and it is the absolute main force for the export of auto products in China.
2: Export direction and product type
From the export perspective, the United States, Japan, the European Union and other developed countries and auto-producing countries are major exporters of auto parts in China. At the same time, the development of some emerging markets such as the Middle East, South America, and Africa has also achieved results. The phenomenon of establishing factories abroad and acquiring foreign companies has also emerged.
In the category of export products, mainly labor-intensive, low-tech products, base, bumper, wiring harness, glass, brake pads, clutch, heat sink, muffler, universal joints with traditional comparative advantages of the product Exports account for a very high percentage. The export of high-tech parts and components also has certain development, but most of the core technologies are still in the hands of large international component manufacturers.
3: At present, China's automobile exports mainly have the following four channels
The first channel is to follow the vehicle export, that is, to adhere to the entire vehicle company to enter the international market. Take liberation of FAW as an example, foreigners usually choose the vehicle model of the entire vehicle first, and then they will go to the engine factory for inspection and finally export it together. This is a method that more domestic products are used for export.
The second channel is foreign direct purchases from China, that is, through the global procurement system of multinational car companies to enter the international market.
The third channel is direct foreign sales of production companies. By acting as a second-tier supplier in foreign markets, the products will be exported directly to foreign countries to ensure the continued growth of exports.
The fourth channel is to rely on foreign trade companies. Professional foreign trade companies have long been engaged in import and export business, are familiar with products and markets, have fixed sales channels, and are able to grasp the dynamics of the international market in a timely manner. At the same time, they have very smooth channels for organizing goods, so they have advantages.
The main competitiveness of China's auto parts exports
1: Cost advantage
1. Low labor costs.
The low labor cost advantage is very important for the formation of the international competitiveness of the auto parts industry. China not only has a low-cost labor force, but also has a large team of skilled technicians. The low labor cost makes China's competitive advantage in labor-intensive components products very obvious. The advantage of labor force is the biggest competitive advantage of China's current auto parts exports.
2. Land cost advantage.
China is in the mid-stage of industrial development. Land prices are at a relatively low level compared with other countries in developed countries and even Southeast Asia. In addition, in order to promote industrial development in the region, especially to attract multinational corporations to local development, various localities have also introduced various policies to reduce land use prices. Moreover, China's vast central and western regions and old industrial areas in Northeast China have yet to be developed and revitalized, which is also conducive to China's sustainable low-cost advantages in terms of land resources.
2: The active introduction of foreign capital
China attaches great importance to the introduction of foreign investment and provides foreign investors with a great deal of preferential tax rates, investment environment, and protection of foreign equity. This not only enhances the income of foreign investment in China, but also greatly reduces its investment risk, thus making a large number of foreign investors, especially large multinational companies willing to invest in China.
Whether a foreign investment can be transformed into an expansion of exports depends on whether it is export-oriented or not. With the change of the life cycle, auto parts have entered the standard production period. At this time, the key is the cost of production. As mentioned in the above two factors, China’s advantages in manufacturing costs are very obvious. As a result, many world-renowned automobile parts and components companies have established several joint ventures and wholly-owned enterprises in China to use China as a horizontally integrated component. The production base transports parts to its entire vehicle production base that distributes around the world. At the same time, the entry of these giants of parts and components has led major auto manufacturers to set up procurement centers in China.
3: The scale advantages brought by the rapid development of the automotive industry
China's automobile industry is entering a high-speed development stage, and the output of automobiles is increasing year by year. The scale of production of auto parts and components in China is increasing. The increase in the production and sales volume of domestic autos brings with it year-on-year expansion of auto parts demand, which will result in economies of scale both internally and externally, and reduce the average cost of products.
From an internal point of view, large-scale production can increase the utilization rate of production lines and implement professional division of labor, thereby increasing production efficiency and saving management costs. On the outside, large-scale production can also establish stable production and technical links with other manufacturers. Raise the negotiation bargaining power with raw material suppliers, enhance the customer's trust in the company's products, and so on.
4: Advantages of late
This mainly refers to the technology, a country in the process of industrial development, if the previous period is in a backward position, there is more room for rapid growth by imitating the developed countries. After entering the country, it can introduce foreign advanced equipment, technology, management, talents, funds needed for development, and even advanced development models, improve individual strength and industrial competitiveness as soon as possible, implement a catch-up strategy, and achieve large-scale export.
China, as a rising manufacturing country, has the advantage of taking advantage of its latecomer advantage in the context of the global development of auto parts and the international division of labor.
5: Customs advantage
The auto industry is still a protected key industry in foreign countries. Foreign governments are now more willing to accept the point of view of new protectionism: to give strong support to their own industries that have advantages, and to promote their exports in order to increase domestic employment and increase national income. Tariffs are a weapon in their hands.
As for the tariff protection of the automobile manufacturing industry, foreign countries usually adopt a waterfall-type tariff system, that is, a lower tariff is imposed on the import of raw materials and components, and the nominal tax rate on automobile imports is higher, which makes it possible to use imported components. The effective protection rate of the final product is much greater than the nominal protection rate. For China’s spare parts exports, such low-tariff policies are undoubtedly a great advantage without discriminatory tariffs.
Problems Existing in the Export of Automobile Parts in China and Suggestions
1: The technology is relatively backward
The ability to develop new products for auto parts in China is weak. There are few export products that fully own intellectual property, and the technical content is relatively low. At the beginning of the new product life cycle, the main factor in the export of products is technology, and it possesses technological advantages, and therefore it has the initiative to export. As the speed of car renewal accelerates, the proportion of standardized production time in the life cycle is gradually shrinking. If we do not focus our development on technological progress, the time for our exports will also be shorter and shorter. Therefore, how to realize the transfer of the core competitiveness of China's auto parts exports from low-cost labor to technology leadership has become an important issue. The suggestion for this is as follows:
1. Subsidize production and export of technology-intensive products and help them gradually establish competitive advantages.
2. Increase the attraction of foreign direct investment. The technology transferred through FDI channels is generally much more advanced than the technology of local companies. In contrast to simple technology licensing, direct investment companies often use their home country’s technical personnel and management systems to transfer packages in order to maximize the use of the transferred technologies, which can overcome the restrictions on the absorption capacity of this new technology in China. .
3. In the short term, the development of OEM can also make up for the lack of export of China's technology-based products to a certain extent.
2: Quotation and price issues
At present, in order to rush to open the international market, some domestic manufacturers often quote prices far below the international average price. This is not conducive to the long-term development of the company; secondly, in the eyes of some large companies, the lower the price, the better. If a product does not have a reasonable profit rate, its product quality may be greatly reduced.
What is even more serious is that domestic enterprises that produce export products compete with each other in price competition and may cause foreign anti-dumping complaints.
In order to solve this problem, it requires the joint efforts of many forces. First of all, when domestic manufacturers offer foreign companies, they must first master the international market and avoid the unfavorable results caused by unquote. Secondly, industry associations should also organize export companies to conduct price self-regulation and oppose price reductions. Once there is an anti-dumping complaint against China's auto parts industry, relevant departments of the auto industry must organize the company to respond actively.
3: Sunk cost issue
The so-called sunk cost refers to the cost that has been invested in advance, and if the contract or project cancellation will not be repaid. When foreign buyers purchase parts, they often bring drawings of auto parts. This requires our country's interested exporters to invest a fee in advance, including mold development. However, the domestic parts and components companies are always afraid to die out for fear of mold costs, and they always hope to sign contracts and open molds. Since we cannot get products that have already been finished, buyers cannot make comparisons, and at the same time feel that our lack of sincerity for cooperation may well not cooperate with us.
China's parts and components companies should believe in their own strength and boldly invest in advances to make molds and produce finished products in advance. This will give people a sense of sincerity and increase the chance of successful cooperation.
4: Order issue
At present, there are mainly two kinds of export orders for auto parts in China: one is after-sales market orders, and the other is OEM orders.
Although China's parts and components exports have grown rapidly, most companies have made aftermarket orders, accounting for more than 85% of China's spare parts exports. This kind of order business belongs to purely international export trade, with low entry threshold and quick time. Compared with OEM orders, this type of order is not stable and advanced technology cannot be learned.
Therefore, how to seize the OEM is the long-term plan for the long-term export of China's spare parts enterprises. This not only requires China's export enterprises to actively strive for OEM orders, but also to learn and adapt to the OEM operating procedures.
5: Problems of counterfeiting and trade barriers
According to a report released by the United States' Motor Vehicle and Equipment Manufacturers Association (MEMA), the annual value of counterfeit auto parts in the world is 1.2 billion U.S. dollars, a large part of which comes from China, India, and South Korea. In a growing number of automotive components, such as brake pads and windshields, there are counterfeit goods that may pose a threat to consumers' personal safety. Therefore, the China Chamber of Commerce for Mechanical and Electrical Products Imports and Exports issued a warning. Following the textile, television, and semiconductor chips, China's rising auto parts industry may face trade barriers from the United States.
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