The Market Degree of China Auto Parts Is Higher Currently

Article Summary: China's domestic auto parts enterprises are improving their own technical strength through overseas acquisitions, the strategy to break the situation that foreign enterprises control key technology and market is becoming more and more evident.

Under the promotion of national policy and people's demand, China automobile market is still carrying on last year's hot market since this year. However, incompatible with the complete vehicle enterprise's situation, China auto parts industry is facing a great dilemma: auto parts enterprises are confronted with serious revenue problems, raw material prices increase, product backlog and the development of enterprises is very difficult. The number of enterprise is large, but the overall quality is not high, the exports have declined sharply, domestic market also has got into the position surrounded by foreign investors.

The present situation of auto parts has fully explained that, the current market degree of auto parts has been relatively high. The low threshold has resulted a large number of private capitals to enter into, the number of enterprise is very large, but the overall quality is not high. China's auto parts only pay attention to output and production, but pay no attention to quality and R&D, some company's factories are large, but special research and development centers are not established. Therefore, the enterprises independence R&D capacity is weak; the anti-risk ability also is poor.

How to guide the auto parts industry to go out of the all-time low as quickly as possible and rapidly rise in the tide of globalization? Experts believe that in the current economic situation, if parts enterprises want to obtain long-term development, they must rely on national policies support, accelerate company merger and restructuring through industry's revitalization and planning, optimize the allocation of resources and then form the competitive power. Mr. Xu Changming, the director of the Information Resources Development Department of China Information Center, he believes that the merger and restructuring of parts enterprises is more urgent than the complete vehicle, if there are no large parts enterprises, the cost can't be declined and the quality can't be improved, so the whole industry's development will be extremely difficult. Domestic parts and components enterprises are small, weak in strength and lack of R & D capabilities, under this background, if they want to develop rapidly they must speed up merger and restructuring, and form the scale effect.

Under the influence of financial crisis, the development of foreign auto parts enterprises is still not optimistic, only in Germany, nearly a hundred of auto parts enterprises are in hot water because the capital chain rupture, they seek buyers and investment opportunities in China, many of them have good technology and stable sales channels. Wang Zhile, the research fellow of International Trade and Economic Cooperation Research Institute of Ministry of Commerce, he suggested that Chinese auto parts enterprises should learn from the experience of developed countries' large-scale two-way investment, and actively promote the process of auto parts industry globalization. They should actively participate in overseas mergers and acquisitions, attract international resources and promote domestic parts industry upgrading.

Currently, some domestic auto companies and parts manufacturers have walked out of China. China's domestic auto parts enterprises are improving their own technical strength through overseas acquisitions, the strategy to break the situation that foreign enterprises control key technology and market is becoming more and more evident. As for how to determine the acquisition objects, industry experts believe that many valuable foreign car companies will face bankruptcy, they have advanced technology and their customers market is also very attractive -- for Chinese companies, this is a good opportunity. A company should know its core competence first, then to evaluate whether the overseas M & A is the best choice and to choose what kind of acquisition targets. Auto companies should give more consideration to quality problems; however, to improve quality the advanced technology is needed, which is a key part that should get in the merger and acquisition.

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