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Europe and the United States purchases Chinese parts and components purchases of US$35 billion by 2007
China's auto parts industry has sparked a mixed reaction from European and American companies. On one hand, they are raising concerns and threatening to file complaints with the WTO over what they see as trade protectionist policies in China’s spare parts sector. On the other hand, they continue to heavily rely on Chinese suppliers due to their cost advantages, using them to cut down production expenses.
Volkswagen is ramping up its "China Purchasing" strategy. Recently, the company revealed that by the end of this year, it plans to purchase $1 billion worth of auto parts and components from China, including a significant portion of exported parts. This move is expected to boost Volkswagen’s import volume of parts by 400% over three years.
The global procurement of parts for Volkswagen is increasingly focused on regions like Jiangsu, Zhejiang, and Changchun—areas known for their strong automotive component industries. Once agreements are finalized, a large quantity of these parts will be shipped to Volkswagen subsidiaries in Germany and other locations worldwide.
Similarly, General Motors has also been increasing its purchases from China. According to officials at Shanghai General Motors, the share of foreign suppliers has been declining, while domestic suppliers now account for more than 70% of total purchases. Currently, there are over 200 local suppliers, including state-owned, private, and joint-venture companies, compared to only around 100 foreign suppliers.
Many Chinese auto parts manufacturers are now entering the supply chains of global automakers. For example, Binzhou Piston, a leading manufacturer in the heavy-duty piston industry, has begun supplying products to major international brands such as GM, Ford, and DaimlerChrysler. The export potential for these products is growing rapidly.
According to recent statistics, the sales revenue of China’s auto parts manufacturing industry exceeded 500 billion yuan last year, showing an 18.67% increase from the previous year. The export value reached $15.235 billion, marking a 75.11% year-on-year growth, with exports accounting for 25% of total sales.
Industry analysts predict that by 2007, the global auto giants will spend $50 billion on spare parts from low-cost countries, with 70% of that coming from China. This highlights the growing influence of China in the global automotive supply chain.
In the mid-to-low-end parts market, Chinese manufacturers are gaining traction with their cost-effective offerings. A foreign car dealer noted that the main reason for increasing purchases from China is cost efficiency. While Chinese auto parts meet international quality standards, their prices are often 30% to 50% lower than those from foreign competitors.
Multinational corporations frequently conduct tenders for parts and components, and Chinese firms are actively participating in these global bidding processes. With large-scale production capabilities and breakthroughs in technology and quality, Chinese-made parts have become highly competitive.
For instance, a plastic door component that costs $10 in the U.S. market can be produced for between $5 and $6 in China. Companies like Delphi and Bosch are also investing more in China to take advantage of these cost savings.
European and American car dealers face a complex dilemma. They are both wary of and reliant on China’s auto parts industry. Many multinational companies want China to abolish the "Administrative Measures for the Import of Auto Parts That Constitute the Characteristics of Complete Vehicles," allowing them to use domestic components without facing tariffs or competition from cheaper imports. However, they also recognize that China’s auto industry is becoming more mature, with parts reaching international standards and offering clear cost advantages. As a result, purchasing from China has become a practical and strategic choice for many global automakers.