China News Service, December 6 — In the global automotive industry value chain, auto parts account for nearly half of the total value. China is rapidly emerging as a key production hub for automotive components. In 2004, the growth of the auto parts industry outpaced GDP growth, with an industrial output value reaching 318.8 billion yuan and market sales amounting to 310.2 billion yuan.
Looking ahead, the supporting market is expected to grow at an average rate of 15% or higher over the next five years, while the automotive aftermarket will see an annual increase of around 10%. In 2005, the Ministry of Commerce plans to boost exports of Chinese automobiles and auto parts, aiming to achieve a long-term goal of exporting between $70 billion and $100 billion worth of vehicles and components by 2010.
According to statistics, domestically, 78% of patented technologies in auto parts joint ventures come from foreign partners, while local companies hold only 22% of the patents. Internationally, Japanese auto parts companies lead with 50% of the patents, followed by European manufacturers at 19%, and U.S. companies at 29%. Chinese firms, however, hold just about 2% of the patents.
Despite the 50:50 capital investment in joint ventures, foreign partners leverage their control over core components to capture the majority of profits. While profit distribution may appear equal on paper, foreign companies often take up to 80% of the profits. This dynamic has led Chinese parts manufacturers to focus on low-technology, labor-intensive, or material-heavy products, with many producing decorative elements rather than core components.
The challenge now is how "Made in China" can break through industrial barriers and successfully enter the international auto parts market. This issue remains a pressing concern for many companies in the sector. (Liu Shuqing)
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