Domestic car companies are busy losing weight to their local suppliers If it is not a sudden financial crisis, China’s domestic auto industry may not be aware of this quickly. In the upstream of the industry chain—the suppliers, there is still a lot of space for further reducing the cost of building vehicles. In order to seek self-preservation in the crisis, the “downsizing†plan for local auto companies has already taken immediate steps. The first step is to reduce the number of suppliers. For local parts suppliers who have been hit hard in the export market, this is tantamount to advancing their "doomday" in advance. Yin Tongyue, chairman and general manager of Chery Automobile Co., Ltd., clearly indicated at Chery's 2009 supplier conference recently that Chery will adjust its supplier system this year. The direction of adjustment is “to increase the number of suppliers by reducing the number of suppliers. The quality of procurement." “They may not be willing to accept such interviews.†Taking into account the supplier system adjustment may involve the sensitive nerves of many domestic parts and components manufacturing companies, Jin Yibo, the spokesperson of the Chery General Office, recently declined the reporter’s request to interview core personnel. "We do reduce the number of suppliers. The purpose of doing so is to improve the quality of parts procurement, rather than unilaterally reduce the cost requirements." A person in the Chery Procurement Department told reporters that Chery will have more than 700 existing Home suppliers cut down to less than 500 homes. Li Shihang, Minister of Planning of the JAC Group, told reporters recently that Jianghuai will select the best one from a number of suppliers and encourage the latter to invest and build factories in Hefei. This will be more conducive to lowering costs and strengthening synchronization with OEMs. Research and development. "This is not to reduce the number of suppliers, but to strengthen the supply system." According to the reporter’s interview, in the economic crisis environment, not only local car companies such as Chery, JAC, and Geely are busy with “downsizing†supply chain systems, but even multinational automobile giants such as the German Volkswagen AG have decided to establish joint ventures in China. Suppliers are slashed. At the end of last month, Volkswagen announced the “2018 China Plan†and launched a streamlined supplier operation called “Supplier Quality Improvement Planâ€. Volkswagen's specific goal is to reduce the existing 700 suppliers from South Korea to South Korea to 450 to 500, while developing 60 to 70 of them into the public's global procurement system. “Even if there is no economic crisis, considering the market competition, it is necessary for local vehicle companies to sort out the necessary supply chain. Because the fierce competition among domestic auto companies has risen to the height of supply chain management.†Gasgoo.com CEO Chen Wenkai said, “Even even including supporting systems that extremely closed Japanese and Korean companies, there have been five joint venture companies that have asked me to recommend suitable local suppliers.†Chen Wenkai, who is committed to helping the OEMs and suppliers cooperate with each other, believes that For local suppliers with certain strength and eagerness to join the global purchasing system of foreign brands, the economic crisis has given them such opportunities. "However, suppliers entering the global procurement system are after all a minority, and more suppliers will be eliminated." Senior executives of a well-known multinational parts and equipment company in China told reporters. Some analysts believe that from the drastic reduction of overseas orders and the “cleaning†of parts suppliers by domestic vehicle manufacturers, many local suppliers will fall into the “frontline†situation in 2009. According to a recent survey conducted by Roland Berger International Management Consulting, the financial status of more than 300 suppliers in the three major markets of the North American Free Trade Area, Europe and Japan is currently in jeopardy. "By 2012/2013, global automotive suppliers will not even be able to complete the sales of cars in 2007." According to Dong Jianping, deputy secretary-general of the China Automobile Industry Association, which has just returned to Europe with the Ministry of Commerce to investigate spare parts investment opportunities, the financial system in the United States and Europe is different from the capital chain of companies. Component suppliers are not expected to experience large-scale bankruptcies as in Europe and the United States. However, in the face of the crisis, China's spare parts companies must make a transition as soon as possible, or they will fall into the overall plight of global suppliers. Local suppliers still have opportunities The reduction in the number of suppliers for OEMs can be explained at two levels: First, the reduction in the number of pure suppliers, which is the process of market competition and survival of the fittest; the other is the change in supplier models, such as modular supply (the original The first-tier suppliers become second-tier suppliers. Accordingly, the number of suppliers must be reduced. Streamlining the actions of suppliers The main point for OEMs is to further reduce costs. Due to the excessive dispersion of suppliers, the supply of each supplier will not be too large. And reducing the number of suppliers can allow other remaining suppliers to expand production scale. This will reduce the cost of OEMs' purchases. Of course, its "bargaining" advantage may also be reduced. In addition to the local OEMs starting to streamline their suppliers, the joint-brand OEMs have been doing the same. According to statistics from Gasgoo.com, there are currently a number of joint-venture brands in China, and in order to further reduce the cost of spare parts procurement, we are considering to attract more local suppliers to join. If in the Chinese market, Toyota, GM and Volkswagen want to further reduce costs, leaving enough room for price wars, it will only expand local procurement. In a sense, the “supply chain war†pioneered by foreign-owned brand vehicle companies means a greater increase for local suppliers that are slightly immature but desperately want to join the global purchasing system of foreign brands. Space and development opportunities. For those auto parts suppliers with strong independence and a certain strength, they do not depend on any large-sized vehicle company, and they also supply many vehicle companies. For example, Zhejiang Wanxiang and Ningbo Huaxiang are not fixed. The key suppliers of parts and components will have more opportunities to be incorporated into the joint venture brand global procurement system. At the same time, those suppliers who are “rooted†in domestic large-scale automobile groups and rely on existing government relations or capital relations to supply them to the group may face a great crisis of survival; in addition, those products have low technical content and management. The high cost of foreign-funded parts and components companies is also in a very disadvantageous position in the supply chain. The last and most critical obstacle is that so far no domestic one has allowed suppliers to rely on stable global OEM partners. Throughout Delphi, Visteon, Denso, Aisin, Bosch, Marelli, and Modern Mobis, all are driven by the growth of strong OEM partners. It is still unknown whether China will have such a strong international OEM. Even if it is not to pursue large scale and influence, the vast majority of China's local mainstream suppliers are facing the pressure of strategic transformation: from a single product and target market to a diversified product, diversified customers, and target market, the ultimate realization The goal of a company's international operation is the three directions for the successful transformation of local parts suppliers.
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