Foreign investment on auto parts turns to JVs
By Tu Lei (chinadaily.com.cn)Updated: 2007-06-06 09:37
Foreign auto parts firms have been very keen on the Chinese market since 2005, but facts show these foreign companies are shifting their focus from sole investment to joint ventures (JVs).
Sources said that Bosch, one of the world's largest auto parts suppliers, plans to invest 620 million more euros (US$836.94 million) into the Chinese market before 2008, and Delphi, a world leader in mobile electronics, said it would build another two JVs in China.
In 2005, 68 percent of foreign auto parts companies chose to invest wholly in China, but in 2007, more firms prefer JVs.
Mahle Tri-Ring Valve Train (Hubei) Co Ltd, a Sino-German JV, was set up in January this year, with Mahle holding 60 percent and Hubei Tri-Ring Valve Train Co Ltd holding the remainder. QTires (Qingdao) Technology Co Ltd is another JV worth US$12 million between American QTires and a Chinese partner also in January. And Getrag (Jiangxi) Transmission Co Ltd, a China-Germany JV between Getrag Corporate Group (Germany) and Jiangling Motor Group (China), was founded in Nanchang City, East China's Jiangxi Province in February, each holding 66.7 and 33.3 percent respectively.
In addition, Spain's NB-BECO and America's Lear also set up JVs in the first quarter of 2007. Only Honda will build a solely-invested factory in Foushan City, South China's Guangdong Province. It is said the JV between Honda and Dongfeng Motor Corporation can not produce a higher level auto parts.
Experts said those foreign auto parts companies have realized the importance to cooperate with local brands after two years of operations in China.
In March, Eaton Corporation, one of the world's leading diversified industrial manufacturers, signed an agreement with Huazhong University of Science and Technology to co-develop auto mechanical technology. Germany's Mann opened its first global franchised outlet in Shanghai and Honeywell also launched three direct-selling auto maintenance centers in Shanghai.
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Bridgestone, a global tire provider, decided to open at least 100 tire shops in China annually after 2007 to raise its market share to 20 percent from the current 15 percent.
Statistics show that Bosch plans to increase its purchases to one billion euros in 2007, compared with 300 million euros in 2006. Currently, Bosch has purchased printing circuit boards and other auto parts, and it may develop qualified mechanical auto parts suppliers as its next step.
Visteon Corporation, a global automotive supplier, said it will increase the number of purchases in the coming years, especially that of electric products by 30 percent. Sources said Visteon’s purchasing quantity in China accounts for 20 percent of its global total and it will build a strong sales group in China as well.
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