Auto Parts Manufacturing in China: Ibisworld Industry Report

CONTENTS
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April 2014
IBISWorld Industry Report
Auto Parts Manufacturing in China

April 2014
About This Industry ................................. 2

Industry Definition .........................................2
Main Activities ...............................................2
Similar Industries ..........................................2
Additional Resources ....................................3
Industry Performance .............................. 4

Executive Summary ......................................4
Key External Drivers .....................................4
Current Performance ....................................5
Industry Outlook............................................7
Industry Life Cycle ........................................9
Products & Markets ................................. 10
Barriers to Entry ........................................... 19

Industry Globalization .................................. 20
Major Companies .................................... 21

Wanxiang Group .......................................... 21
Beijing Hyundai Mobis Auto Part Co., Ltd. ... 22
Shanghai Huizhong Automotive Manufacturing
Co., Ltd. ....................................................... 23
United Automotive Electronic Systems Co,.
Ltd. ............................................................... 24
Changchun FAWAY Automobile Components
Co., Ltd. ....................................................... 25
Other Players ............................................... 26
Supply Chain ................................................10

Products & Services .....................................11
Demand Determinants ..................................12
Major Markets ...............................................12
International Trade........................................13
Business Locations .......................................14
Operating Conditions .............................. 29
Competitive Landscape ........................... 16
Key Statistics ........................................... 31
Market Share Concentration .........................16

Key Success Factors ....................................16
Cost Structure Benchmarks ..........................17
Basis of Competition .....................................18
Industry Data................................................ 31
Annual Change ............................................ 31
Key Ratios.................................................... 32
Jargon .......................................................... 32
Capital Intensity ........................................... 29

Technology & Systems ................................ 29
Revenue Volatility ........................................ 30
Regulation & Policy ...................................... 30
Industry Assistance ...................................... 30
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April 2014
About This Industry

Industry Definition
Businesses in the Auto Part Manufacturing industry in China produce parts, accessories and components
for motor vehicles, including motor vehicle bodies, mechanical and electronic components, and parts for
electric motors. These manufacturers supply motor vehicle assembly and replacement part companies (i.e.
the aftermarket).
Main Activities
The primary activities of this industry are:
Automobile body parts and accessories manufacturing
Chassis parts and accessories manufacturing
Electric components and parts manufacturing
Engine parts and accessories manufacturing
Other parts and accessories manufacturing
The major products and services in this industry are:
Mechanical parts and accessories
Electric motor parts and accessories
Electronic parts and accessories
Similar Industries
3724 - Automobile Body and Trailer Manufacturing in China
This industry is engaged in the oiling, inflating, waxing, polishing, paint spraying, cleaning, changing and
retailing of auto parts and accessories.
6562 - Auto Parts Stores in China
This industry retails motor vehicle parts and accessories.
7311 - Car Rentals in China
This industry provides short-term (30 days or fewer) and long-term (more than 30 days) rentals of
automobiles.
3721a - Passenger Car Manufacturing in China
This industry manufactures passenger automobiles.
Additional Resources
For additional information on this industry:
www.cnautoparts.net
China Automobile Parts Network
www.chinese-autoparts.com
China Auto-parts Information Network
www.caam.org.cn
China Association of Automobile Manufacturers
www.customs.gov.cn
China Customs
www.stats.gov.cn
National Bureau of Statistics China
April 2014
April 2014
Industry Performance
Executive Summary
The development of the Auto Part Manufacturing industry is being driven by the fast-growing Automobile
Manufacturing industry (IBISWorld industry report 3721) and strong growth in the number of automobiles
in use across China. In 2009, the Chinese government launched a series of measures to boost automobile
sector growth. These measures included reduced automobile sales taxes, direct subsidies to rural
households purchasing automobiles, and the indirect effects of the government's $500 billion stimulus
package. At the end of 2013, the total number of automobiles in use in China was nearly 137 million; this
number is expected to continue increasing rapidly in future years.
China's accession to the World Trade Organization (WTO) in 2001 helped facilitate the development of the
automobile parts and accessories market by encouraging an open and rational market structure. However,
membership in the WTO also meant that China had to reduce its tariffs and non-tariff barriers, and open
up its service sector. China's Auto Part Manufacturing industry is less efficient compared to those in
developed countries, and faces increasing competition as the market continues to become more globalized.
In 2014, industry revenue is expected to total $496.3 billion, up 12.5% from 2013. Over the five years
through 2014, revenue has been increasing at an annualized rate of 17.3%. Domestic demand totals $494.1
billion, up 12.3% from 2013. Meanwhile, exports are estimated at $29.0 billion and imports $26.8 billion
in 2014. The production of advanced automotive parts is still very limited in China and products such as
acoustic systems, automobile special-purpose ICs (integrated chips), high-end sensors, and
microprocessors are imported from developed countries.
In the next five years, industry revenue is forecast to increase at an average annualized rate of 9.8%,
totaling $790.3 billion in 2019. As the technology and the quality of Chinese products improves, and
pricing levels remain very competitive, demand from foreign countries will increase steadily. As a result,
exports are projected to grow 8.3% per year to reach $43.3 billion in 2019. However, many manufacturers
will suffer under the double pressure of rising raw material prices and the decreasing price of automobile
parts and accessories from assembly plants.
Key External Drivers

The key sensitivities affecting the performance of the Auto Parts Manufacturing industry include:
Downstream Demand - Motor Vehicle mfg
Automobile parts and accessories manufacturers have a close relationship with complete automobile
manufacturers and are increasingly required to provide complete sub-systems for assembly.
Exchange Rates - Yuan per $US
The appreciation of the yuan makes Chinese exports less competitive in foreign markets, and imports
cheaper in the domestic market.
Import Taxes (Duties) - Car Retailing
Further reductions in tariffs will lead to greater import penetration. Imports are significant in the
aftermarket segment, where substitutes of original equipment prevail.
Industry Systems and Technology - Motor Vehicle and Part mfg
Technology and systems influence production costs and the types and specifications of products
manufactured.
Upstream Supply - Metal Ore Mining
April 2014
Rising raw material prices increase production costs and can squeeze profit if these costs are not passed on
to customers.
Current Performance
Revenue for the Auto Part Manufacturing industry in China has been growing at an annualized rate of
17.3% in the five years to 2014. In 2014, industry revenue is expected to increase 14.9% to total $496.3
billion.
Strong growth in the downstream Automobile Manufacturing industry (IBISWorld industry report 3721)
drove a significant proportion of revenue growth in the Auto Part Manufacturing industry in the five years
through 2014. The number of automobiles manufactured in China increased at an annualized rate of 16.4%
between 2007 and 2013 to 22.1 million units. Strong domestic demand for cars, as well as increased foreign
demand for the industry's products, will continue to drive industry growth.
Industry performance
In 2013, the sales volume of Chinese automobiles increased by 13.9% from 2012 to 22.0 million units. In
2012, China's automotive market performed weakly with sales growth of just 4.3%. The sales volume of
commercial vehicles decreased by 5.5% during the year with the slowdown of China's macro-economy. As a
result, industry revenue growth grew just 13.7% over the year.
In 2011, affected by the cancellation of some major preferential policies and a limit on automotive
purchases in large cities such as Beijing, China's automotive market exhibited weak performance with sales
growth of only 2.5%, down from 32.4% in 2010. Consequently, the Auto Part Manufacturing industry grew
only 16.1% that year, down from 31.4% in 2010.
In 2010, the automotive market in China expanded strongly due to the government's favorable policies and
the industry benefited greatly from surging downstream demand. Output of automobiles totaled 18.3
million units in 2010, up 32.4% from 2009. Also, exports increased significantly (35.2%) in the year due to
the recovery of foreign demand. Industry revenue totaled $292.2 billion, up 31.0% from 2009.
At the beginning of 2009, the Chinese government launched a series of measures to boost automobile
sector growth. These measures included reduced automobile sales taxes, direct subsidies to rural
households purchasing automobiles, and the indirect effects of the government's $500 billion stimulus
package. Automobile sales grew strongly over the year. Output of automobiles in China amounted to 13.8
million units, up 47.6% from 2008. However, with the industry's exports declining 20.8% in 2009 due to
weak demand in foreign markets, industry revenue increased at the slower rate of 26.4% for the year.
In late 2008, as the global financial crisis spread and the Chinese economy slowed, sales of automobiles
declined dramatically. However, industry revenue had increased strongly in the first three-quarters of the
year, so overall industry revenue growth was 32.1% for the year.
Industry profitability
Average industry profit is expected to be 6.7% of revenue in 2014. Profit levels declined in the past few
years due to increasing raw material costs and wages. With competition among firms expected to intensify,
participants will have to lower prices to retain market share. Therefore, industry profitability is expected to
decline in the future.
Exports and imports
China has become one of the largest manufacturers of automobile parts and accessories in the world.
Export growth was significant in the past decade, particularly from 2004 to 2007, driven by strong demand
in the United States and Japan. Exports have been increasing at an annualized rate of 14.9% between 2009
and 2014. However, growth has fluctuated significantly over the period, with a 20.8% drop in export value
in 2009 due to weaker foreign demand, and a 35.2% increase in 2010 due to the recovery in the global
April 2014
economy. Exports as a proportion of industry revenue are expected to decline to 5.8% in 2014, down from
6.5% in 2009.
Competing imports have increased at an annualized rate of 11.6% during the past five years to 2014. The
demand for high quality automobile parts in China is still reliant on imports, as domestic manufacturers
cannot produce high quality and specialized automobile parts. In 2006, imports increased significantly by
28.6%. Over the five-year period, more foreign automobile parts manufacturers moved their production
facilities to China, bringing with them advanced technologies and the capability to manufacture specialized
auto parts. As a result, import growth has been slower than in the previous five-year period.
Establishments and wages
In the five years through 2014, there were many new market entries from domestic and foreign enterprises.
Foreign players entered the market by forming joint venture companies with local producers, or through
mergers and acquisitions. Mergers between domestic manufacturers have also been occurring. Domestic
companies have combined efforts to strengthen market positions, increase market shares and enlarge sales
networks.
Total industry wages have increased significantly during the past five years, at an annualized rate of 22.9%.
The average annual wage per employee increased almost double from $5,042 in 2009 to $9,606 in 2014, a
reflection of the surging labor costs in China.
Technology and economies of scale
Although developing strongly, the industry still uses relatively backward technologies. Economies of scale
have not yet been completely developed. There are numerous small players in the industry, and few firms
are large scale with significant market shares.
In some regions of South and East China, a number of family businesses are involved in automobile part
manufacturing. Each family specializes in the production of goods within a single segment or sub-segment.
In recent years, several families have combined to form economies of scale and scope, by sourcing products
from each other at lower prices and by offering a large variety of products to customers. However, the
production capacity and technology level of each independent operator is limited.
Furthermore, the production of advanced automotive parts is very limited in China. Products such as
acoustic systems, automobile special-purpose ICs (integrated chips), high-end sensors, and
microprocessors are still imported from developed countries. Also, costly compound materials, such as
aluminum, magnesium, titanium and some advanced plastic materials are generally not used in Chinesemade products.
Research and development
The research and development (R&D) ability of domestic manufacturers is weak due to limited capital for
investment. For this reason, domestic companies often fail to meet the demand and quality requirements
from the fast growing Automobile Manufacturing industry. In addition, they face pressure from foreign
automobile part manufacturers operating in China that possess patents and intellectual property rights.
Annual investment in R&D in China averaged between 1.0% and 1.5% of sales revenue over the past five
years. In developed countries, the rate is typically 3.0% to 5.0%, with some enterprises reaching 10.0%.
The share of R&D investment in parts and accessories in total income should be 1.2 to 1.5 times that of the
share of R&D in the Automobile Manufacturing industry to offer the required products to downstream
customers. By contrast, in China it is less than a third. This severely limits the R&D level and capacity of
the industry. However, domestic enterprises are beginning to increase investment in R&D to become
professional manufacturers of high-quality products.
April 2014
Industry Outlook
ACMR-IBISWorld forecasts that in the five years to 2019, total revenue of the Auto Part Manufacturing
industry in China will increase at an annualized rate of 9.8% to $790.3 billion. The main drivers of industry
growth will be steady increases in overall demand for automobile parts and accessories, as well as gradual
demand growth from China's Automobile Manufacturing industry (IBISWorld industry report 3721).
International trade
The industry's exports are forecast to increase at an annualized rate of 8.3% over the next five years. As
China has become one of largest manufacturers of automobile parts and accessories in the world, export
volumes will continue to increase strongly, especially, as the technology and the quality of Chinese
products improves.
However, as a proportion of industry revenue, exports are expected to decrease from 5.8% in 2014 to 5.5%
in 2019 due to faster growth in domestic demand.
Competing imports are expected to increase at an annualized rate of 6.3%. As more foreign manufacturers
with the ability to produce specialized and high quality industry products establish factories in China, the
share of imports in domestic demand is expected to decrease from 5.4% in 2014 to 4.6% in 2019.
The number of enterprises is forecast to increase 3.6% per year in the next five years, reaching 5,345 in
2019. Total industry wages, however, will grow at the much faster annualized rate of 10.7% due to higher
wages per employee.
Growing downstream demand
China's automobile sector is forecast to maintain high annualized growth levels of 8.0% to 10.0% over the
next 15 years. The Automobile Manufacturing industry in China is projected to grow almost 1.5 times faster
than China's GDP over the period.
Further separation of the Automobile Manufacturing industry and the Auto Part Manufacturing industry is
expected. At present, some automobile parts and accessories manufacturers belong to complete
automobile manufacturing enterprises in China, which limits the development of the industry to some
extent.
Industry globalization
Further industry globalization will be a major trend in the industry as manufactures expand export
markets, while continuing to satisfy domestic demand. China will continue to be one of the largest
manufacturers of automobile parts and accessories in the world.
High penetration levels of foreign capital in the Automobile Manufacturing industry in China will further
threaten local automobile parts and accessories manufacturers. Foreign enterprises obtained large market
shares in the passenger vehicle part market in China in recent years. Currently, foreign capital accounts for
over 36.0% of China's automobile parts and accessories market.
Foreign enterprises are also the sole market for certain automobile parts, such as high-end electronic
controls, fuel injection systems, transducers, brake systems, and steering systems. As such, domestic
enterprises face increasing challenges from their foreign competitors, and will likely look to improve
performance through mergers and acquisitions.
Increasing competition
Economies of scale and increased competition will be important industry drivers. At present, there are
many small enterprises that operate at low efficiency levels. Problems caused by small scale, low
concentration and disorderly competition inhibit the development of the industry, and domestic
manufacturers will have to integrate to complement each other and allocate resources more efficiently.
April 2014
It is also important that firms in the industry strengthen research and development (R&D) abilities. China
has incorporated some advanced foreign technology, equipment and management systems; however,
domestic manufacturers still need to strengthen their R&D ability to manufacture independent products to
meet the requirement of complete automobile manufacturing enterprises.
Profit declines will be a serious challenge as competition between assembly plants and parts manufacturers
intensifies. Moreover, many automobile parts and accessories manufacturers will suffer the double
pressure of rising raw material prices and decreasing prices of automobile parts and accessories from
assembly plants. Competition pressure will have a smaller impact on foreign automobile parts
manufacturers in China as they possess patents and unique technology, thus are better able to resist price
cuts.
April 2014
Industry Life Cycle

This industry is in the growth stage of its life cycle.
Life Cycle Stage
Industry value added increased strongly in recent years
There are frequent technology changes and innovations in this industry
New products can be rapidly developed for downstream industries
The Auto Part Manufacturing industry in China is in the growth phase of its life cycle. Industry value added
is expected to increase at an annualized rate of 12.5% between 2009 and 2019, much faster than China's
average GDP (7.3% per year) over the same period.
The industry's enterprise and establishment numbers are also expected to increase during 2009 and 2019,
indicating new market entrants and greater investment in sales network development.
Technological changes and innovations are relatively frequent in the industry. Several foreign
manufacturers that have recently entered the market have established joint ventures with local companies
and brought advanced technologies and management expertise. This has contributed to the development
of domestic manufacturers and the expansion of their operations.
The domestic market still has unmet demand for high quality automobile parts and accessories. In
addition, the average usage rate of automobiles remains relatively low, particularly in the central and
western areas in China. Steady usage increases will stimulate further demand for automotive parts and
accessories.
April 2014
Products & Markets

Supply Chain
Key Buying Industries
3721 - Automobile Manufacturing in China
This industry manufactures complete automobiles and automobile engines using auto parts and
accessories.
3724 - Automobile Body and Trailer Manufacturing in China
This industry manufactures non-drive vehicles towed by motor vehicles using auto parts and accessories.
3726 - Car Repair Services in China
This industry conducts automobile repairs that require automobile parts and accessories.
6372 - Auto & Parts Wholesaling in China
This industry wholesales automobiles and auto parts and accessories.
6562 - Auto Parts Stores in China
This industry retails auto parts and accessories.
3721a - Passenger Car Manufacturing in China
This industry manufactures passenger cars using auto parts and accessories.
Key Selling Industries
3070 - Plastic Parts Manufacturing in China
Plastic parts are used in the production of automobile parts and accessories.
3591 - Iron & Steel Casting in China
Cast products are used in the production of automobile parts and accessories.
4061 - Electronic Component Manufacturing in China
This industry supplies electrical equipment and components as inputs for electric motor parts and
accessories.
4121 - Scientific Instrument Manufacturing in China
This industry supplies tachometers, production counters, distance recorders and other instruments and
meters used in automobile parts.
10
11
April 2014
Products & Services

23.5%
22.5%
54.0%

Mechanical parts and accessories make up the main product segment of the industry, contributing 54% of
total industry revenue in 2014. The majority of automobile components are mechanical parts, including
bearings, filters, covers, brakes and clutches. The price of mechanical parts has increased in the past few
years due to the rising price of raw materials.
The second-largest industry segment is parts and accessories for electric motors, accounting for an
estimated 23.5% of total industry revenue in 2014. This segment includes starting motors, alternators,
control units for electronic systems, and mechanical and electronic drivers. Demand for products within
this segment is relatively steady, and is expected to experience only small proportional increases in the
future.
Electronic parts and accessories is the third major industry segment, generating 22.5% of total industry
revenue in 2014. This segment includes engine electronic control systems, anti-lock braking systems
(ABS), meters, global positioning systems (GPS), transducers, entertainment systems, and items used in
the control, safety, communication and entertainment fields. This segment will increase in size in line with
the development of China's automobile manufacturing sector and growing demand for high-end
automobiles.
12
April 2014
Demand Determinants
Economic growth levels
China's economy has been growing rapidly in recent years, and has contributed to strong growth in market
demand and industry revenue.
The development and expansion of automobile industries
The Automobile Manufacturing industry in China (IBISWorld industry report 3721) is developing strongly,
creating high growth potential for automotive parts and accessories manufacturers. At the end of 2013, the
total number of automobiles in use in China was nearly 137 million.
Diversity of downstream industries
Different vehicles require different types of automobile parts and accessories. This can stimulate demand
for a wide variety of products manufactured by this industry.
Quality and technology levels
The development of new technology and the production of high quality products promote demand for the
industry's products.
Government regulations
National and provincial regulations have encouraged the development of the industry. These have focused
on providing a better operating and market-focused environment for the industry.
Major Markets
Direct sales
39.2%
Distributors (wholesalers)
34.2%
Retailers
20.8%
Exports
5.8%
Direct sales
Most of the industry's products are sold directly to end-users through supplier service centers and parts
and accessories shops. At present, suppliers strictly control sales of some essential automobile parts, such
as engine and automobile body parts. Customers can purchase these parts only directly from their
suppliers. This is one of the measures suppliers take to guarantee product quality and avoid the impact of
counterfeit automotive products on their image.
Distributors
April 2014
13
The second-largest segment is distributors and dealers. Some foreign suppliers have established first- and
second-tier distributors responsible for automobile part and accessories sales and distribution. As
automobile production is concentrated in Shanghai, Changchun, Hubei, Beijing, Tianjin, Guangzhou,
Chongqing and Harbin, these have become cities with well-developed distributor networks for automobile
parts and accessories sales.
Retailers
Retailers are the third-largest market segment in the industry (IBISWorld industry report 6562). Some
cities have established retail markets for automobile parts and accessories, such as Beijing West Suburb
Automobile Parts and Accessories Market, Shanghai Oriental Automobile Parts and Accessories Market,
and Wuhan Wanguo Automobile Parts and Accessories Market. Customers often prefer to buy products
from these markets for the large product range and relatively lower price of parts and accessories.
Exports
Exports are expected to account for 5.8% of industry revenue in 2014. Exports play an important role in
this industry as China is one of the largest producers of automobile parts and accessories in the world.
International Trade
Exports in this industry are medium and steady.
Imports in this industry are medium and steady.
Exports
Exports are expected to increase by 10.7% in 2014 to $29.0 billion or 5.8% of industry revenue in 2014.
Exports increased strongly from 2006 to 2008 due to expansion and improvements in the production
capacity of domestic manufacturers. However, exports dropped 20.8% in 2009 due to the global financial
crisis and lower foreign demand.
Over the next five years, the industry's exports are forecast to increase substantially at a rate of 8.3% per
year. The improving manufacturing ability, capacity and technology of China's local manufacturers will
drive foreign demand for automobile parts and accessories produced in China.
According to China Customs, the major export markets for the Auto Part Manufacturing industry in 2013
included the United States (30.4% of total exports by value), Japan (10.1%), South Korea (4.7%), Germany
(4.3%), and Russia (3.9%). Higher labor costs in these countries resulted in growing demand for Chinesemade auto parts.
Imports
Competing imports are expected to increase 7.6% in 2014 to $26.8 billion, and account for 5.4% of
domestic demand. In 2013, the major source of competing imports into China was Germany, accounting
for 35.5% of total import value. Other major import markets included Japan (30.0%) and South Korea
(13.8%). The imported value of these three countries accounted for 79.3% of total competing imports into
China in 2013.
China will continue to import automobile parts and accessories as many local manufacturers only operate
low-technology product lines. However, the ratio of imports to domestic demand will decrease, as local
manufacturers develop their facilities and invest in more productive equipment.
Business Locations
Region
Percentage
East China
45.1
Middle South China
26.1
South West China
9.4
North China
9.2
North East China
8.6
North West China
1.6
Region
Percentage
East China
49.7
Middle South China
23.4
South West China
9.3
North China
8.1
North East China
8.6
North West China
0.7
Region
Percentage
East China
46.6
Middle South China
24.0
South West China
6.9
North China
11.2
North East China
10.0
North West China
1.3
April 2014
14
April 2014
15
The industry's operations are mainly concentrated in the economically well-developed East China and
Middle South China regions. Due to higher per capita incomes, larger populations and higher usage of
automobiles, many industries in these regions are growing strongly, leading to greater demand for
automobile parts and accessories. Zhejiang, Jiangsu, Shanghai, Shandong, Guangdong and Hubei are
estimated to account for about 47.9% of total industry revenue in 2014.
Jiangsu, Zhejiang, Shanghai and Shandong
The industry tends to be highly concentrated in eastern coastal areas because larger firms in these areas
are able to benefit from economies of scale and close proximity to imported raw materials and downstream
industries. Zhejiang, Jiangsu, Shanghai and Shandong are the most dynamic areas in this region. In 2014,
these four provinces are expected to account for 39.5% of total industry revenue, with 40.2% of total
establishment numbers and 36.9% of total industry employment.
Guangdong
Guangdong is the manufacturing center of China and households in this region have relatively high
disposable income levels. About 5.5% of industry establishments are located in Guangdong due to the large
market potential. Revenue generated from this province is estimated to account for 8.4% of total industry
revenue in 2014. The two first-tier cities, Guangzhou and Shenzhen, are the most dynamic areas in
Guangdong province.
Hubei
Revenue generated from Hubei province accounts for an estimated 6.8% of the total in 2014, with 8.3% of
the total establishment number. Wuhan is the most dynamic city in this area, and one of the leading
companies in the industry, Dongfeng Motor Suspension Spring is located there.
April 2014
16
Competitive Landscape
Market Share Concentration
The level of industry concentration is low.
The Auto Part Manufacturing industry in China has a low concentration level, which is expected to remain
steady in future years. Revenue of the top four firms is expected to account for 6.9% of total industry
revenue during 2014. There are a large number of small and medium enterprises operating in the industry,
and the market is highly fragmented.
There are many manufacturers that operate on a small scale and are privately owned. The majority of these
lack substantial capital, technologies and employees, and only produce single products and spare parts.
The low concentration level also reflects the diverse nature of the industry's products. Firms tend to focus
on particular parts or markets, and the majority of enterprises manufacture single products. Only some
larger firms are able to manufacture a wide variety of automobile parts and accessories.
With increased price competition and falling profit margin, ACMR-IBISWorld forecasts that the industry
concentration level will remain steady in the future, despite some consolidation and merger activity.
Key Success Factors

The key success factors in the Auto Parts Manufacturing industry are:
Successful industrial relations policy
Secure relationships with downstream firms is a competitive advantage for industry enterprises.
Having an extensive distribution/collection network
Having effective sales channels can help manufacturers increase market share and revenue growth.
Undertaking technical research and development
Product innovation and expenditure on research and development can be a competitive advantage for
industry firms.
Effective quality control
Successful companies in this industry adopt quality assurance techniques and policies to improve their
products and processes.
Access to the latest available and most efficient technology and techniques
The degree of investment in technological improvements and product development can improve the
products and revenue of firms in this industry.
Establishment of export markets
The development of export markets is important for some firms in this industry.
Understanding government policies and their implications
Understanding the implications of changing government policies is important for new and existing firms.
April 2014
17
Cost Structure Benchmarks
Purchases
62.0%
Wages
5.7%
Management and Administration
4.6%
Rent
3.5%
Depreciation
3.5%
Tax and Interest
2.9%
Utilities
2.3%
Other
8.8%
Profit
6.7%
Profit
Average industry profit is estimated at 6.7% in 2014. Profit levels have been declining over the past few
years due to increasing raw material and labor costs. However, industry profitability has increased since
2009 due to surging downstream demand from automobile manufacturers.
Purchases
The major cost in the industry is raw materials, including iron, steel and machine parts. These are expected
to account for about 62% of industry revenue in 2014. Due to increasing global and domestic demand for
raw materials over the past several years, prices have risen substantially, particularly steel prices.
Depreciation
Industry depreciation is expected to account for 3.5% of industry revenue in 2014. This includes
depreciation of buildings, machinery, equipment, office facilities, and vehicles. Depreciation expenses have
been stable, which indicates a steady level of capital investment.
Wages
Another major industry cost is labor, which accounts for 5.7% of industry revenue in 2014. Management
and administration costs account for an additional 4.6%. Although the cost of labor is lower in China than
in other countries, the technology of domestic manufacturers is not advanced. Therefore, firms need large
numbers of employees for production.
Other costs
Other costs depend on the operations of each firm, and may include logistics and transportation, storage,
maintenance, subcontractors, insurance, advertising, and other expenses.
April 2014
Basis of Competition
Competition is high and increasing.
Price
A main basis of competition is product price. To keep pricing competitive, automobile parts and
accessories manufacturers have been forced to partly absorb increased production costs due to rising steel
prices in recent years
Product quality
Firms that have the ability to manufacture products according to specifications can have an advantage in
the market. Customers generally find a balance between quality and price when choosing equipment
suppliers. The quality of products is very important for exporting firms and their customers.
Service
The ability to provide after-sales service and repairs can be important for customers and can influence the
brands they choose.
Sales distribution channels
Customers may prefer to purchase products that are supplied via a wide and extensive retail distribution
network. This can have a significant impact on costs and competitiveness of manufacturers.
Customer relationships
The relationships that automobile parts and accessories firms have with customers are also important to
ensure that problems are dealt with promptly and effectively. Some large manufacturers have successfully
retained the same customers for several decades by maintaining strong client relationships.
Technical expertise
In recent years, advances in technology, the use of state-of-the-art facilities, and the retention of skilled
and dedicated employees have helped firms in this industry to maintain their competitive advantages.
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April 2014
19
Barriers to Entry
Barriers to entry are medium and steady.
Barriers to Entry checklist
Level/Impact
Industry Competition
Industry Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation and Policy
Industry Assistance
High
Low
Growing
Medium
Medium
Medium
High
SOURCE: IBISWORLD
Investment scale
The need to invest in large and efficient manufacturing facilities can discourage competitors from entering
the industry. The high costs associated with the construction of facilities are a significant deterrent to
entry. In addition, the cost of developing large-scale production is very high.
Technical expertise and knowledge
New firms must have similar or enhanced levels of technical expertise, skilled workers and technology to
compete with existing forms. In particular, the establishment of sales networks and distribution channels
poses challenges for newcomers.
Government and environmental regulations
Due to the hazards, materials, and waste that firms in this industry produce, national and local
governments require environmental approvals to operate in the industry. These legal requirements are
important barriers facing a new manufacturer to the industry.
Establishing a good reputation
As some domestic and foreign manufacturers have good reputations and well-known brands, customers
may prefer to deal with these suppliers, which creates a further barrier to entry.
April 2014
20
Industry Globalization
The level of globalization is medium and increasing.
The Auto Part Manufacturing industry in China is subject to a medium globalization level, which is
expected to increase in the future.
Many export-oriented domestic companies have emerged in the past decade, which has accelerated
industry globalization. China has become one of the top countries for automobile parts and accessories
manufacturing in the world.
In addition, several foreign automobile parts and accessories manufacturers have entered the China
market in recent years by establishing factories and joint ventures with domestic firms. This resulted from
strong domestic demand for high-quality automobile parts and accessories products in China. In addition,
foreign firms see strong opportunities for company expansion and development in China. Foreign
enterprises are estimated to account for about 41.3% of industry revenue in 2014. With greater levels of
foreign investment in this industry in China in the future, the globalization trend is expected to increase.
Enterprises by ownership type (2014)

Ownership
State Owned
Collectively Owned
JECE*
Shareholding
Private
Foreign
Other
Revenue share Enterprise share

Percentage
Percentage
3.6
0.9
0.7
5.4
30.3
41.3
17.9
1.4
1.4
0.7
2.4
49.2
24.9
20.1
SOURCE: ACMR-IBISWORLD ESTIMATE
NOTE: *JOINT-EQUITY COOPERATIVE ENTERPRISE
April 2014
21
Major Companies
Major Player
Market
Share
Wanxiang Group
4.2% (2014)
Beijing Hyundai Mobis Auto Part Co., Ltd.
1.1% (2014)
Shanghai Huizhong Automotive

Manufacturing Co., Ltd.
0.8% (2014)
United Automotive Electronic Systems Co,.

Ltd.
0.8% (2014)
Changchun FAWAY Automobile

Components Co., Ltd.
0.7% (2014)
Other
92.4% (2014)
Wanxiang Group
Market Share: 4.2%
Wanxiang Group was founded in July 1969 and is headquartered in Xiaoshan city, Zhejiang province.
Currently, it employs over 40,000 workers. The group's main products include universal joints, bearings,
and constant-velocity (CV) joints. Wanxiang Group has a manufacturing base covering four square
kilometers, and has strategic partnerships with local factories in Changchun, Hubei, Hainan, He'nan,
Jiangsu, Heilongjiang, and Anhui. The group has 31 companies (including 18 holding companies or other
ventures) in 8 countries, including the United States, the United Kingdom, Germany, and Canada.
Wanxiang Group manufactures a large range of products, from spare parts to components and systematic
template supplies. It sells to domestic and foreign markets, including to customers in over 40 countries,
such as the United States, Canada, Latin and South America and all of Europe. The group's products are
also sold to some major automobile manufacturers like GM and Ford. Wanxiang America Corporation
provides full-line customer service to clients in the United States, Canada, and South America. In addition
to the automotive market, Wanxiang is also involved in large-scale agriculture, aquaculture, real estate
development, infrastructure development, and other programs.
Financial performance
In 2012, Energy Saving and New Energy Vehicles Industry Development Planning (2012-2020) was
issued, and Wanxiang Group will continue transform from traditional vehicles parts to new energy vehicles
parts.
In August 2012, with $450 million of capital injection, Wanxiang Group obtained 80% stock equity of
A123, a maker of batteries for electric vehicles that received U.S.-government backing. Exports of the group
totaled $2.60 billion, and company revenue surged to $18.48 billion.
22
April 2014
In March 2011, the first phase of an expansion project was put into operation, which increased the annual
production capacity of wheel bearings by 2.5 million sets. The project is expected to be completed in 2014,
which will lead to an increase of 10 million sets of wheel bearings in annual production capacity. Wanxiang
Group is estimated to account for 4.1% of total industry revenue, making it the market leader.
In 2010, China's automobile market experienced rapid development. Both output and sales of automobiles
in China surpassed 18 million units. Surging downstream demand stimulated revenue growth and in 2012,
the Wanxiang Group generated revenue of $9.8 billion, up 28.7% from 2009, and reflecting an annualized
growth rate of 26.4% in the period from 2006 to 2010. In January 2008, the Wanxiang Group acquired
Automotive Components Holdings (ACH) via its US subsidiary Neapco. ACH is the subsidiary of Ford
engaged in auto parts manufacturing in the United States.
In July 2007, the Wanxiang Group acquired 30.0% of AI, the top supplier of auto parts for GE, Ford and
Chrysler. The group enlarged the foreign market share of auto parts by this acquisition. In 2005, the group
merged with Hubei Tongda Automobile Parts and SP Company (a US company).
Wanxiang Group - financial performance

Year
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013*
Revenue
US Million Dollars
Growth
% change
EBIT
US Million Dollars
Growth
% change
Assets
US Million Dollars
Growth
% change
1613.6
3078.7
3829.2
5370.3
6661.8
7592.3
9769.6
12625.7
18478.0
23150.0
N/C
90.8
24.4
40.2
24.0
14.0
28.7
29.2
46.4
25.3
93.5
92.7
118.4
431.2
N/A
N/A
N/A
N/A
N/A
N/A
N/C
-0.9
27.7
264.2
N/C
N/C
N/C
N/C
N/C
N/C
1038.9
2057.0
2518.3
3082.6
N/A
N/A
N/A
N/A
N/A
N/A
N/C
98.0
22.4
22.4
N/C
N/C
N/C
N/C
N/C
N/C
SOURCE: ANNUAL REPORT

NOTE: *ACMR-IBISWORLD ESTIMATES
Beijing Hyundai Mobis Auto Part Co., Ltd.

Market Share: 1.1%
Hyundai Mobis was established in July 1977 and is one of the largest container manufacturers in the world.
Hyundai Mobis started production of automobile parts in 1999, specializing in the manufacture of chassis
modules. That year, Hyundai Mobis sold its automobile division for four-wheel drives including Galloper
and Santamo to Hyundai Motor, and its railway cars division to Korea Rolling Stock Technology
Corporation.
In 2000, the company moved its container manufacturing plants overseas and acquired the after-sales
parts business from Hyundai Motor and Kia Motor. In January 2002, Hyundai Mobis sold its heavy
machinery business to Rotem Company, and completed a restructuring process to become the largest
Korean automotive parts company with after-sales parts sales, automotive parts exports and module parts
manufacturing as its operating areas.
23
April 2014
In 2002, Hyundai Mobis established Beijing Hyundai Mobis Auto Part with registered capital of $14.36
million and 485 employees. The company's main products are front chassis modules, rear chassis modules,
cockpit modules and front end modules.
In September, 2012, the sixth logistics center of the company of the company, Xi'an logistics center, was
put into operation. Its delivery scope covers Shaanxi, Gansu, Ningxia, Qinghai and Xinjiang, providing
service for over 40 Beijing Hyundai dealers.
In 2013, company revenue was estimated to total $3.66 billion, with an annualized growth rate of 26.2% in
the period from 2007 to 2013. In March 2007, Hyundai Mobis established its second factory to enlarge
production capability of front rolling, rear suspension, and front-end modules.
Beijing Hyundai Mobis Auto Part - financial performance

Year
2004
2005
2006
2007
2008*
2009*
2010*
2011*
2012*
2013*
Revenue
US Million Dollars
Growth
% change
EBIT
US Million Dollars
Growth
% change
Assets
US Million Dollars
Growth
% change
468.7
795.5
1134.8
904.1
2015.7
2306.7
2675.9
2943.5
3180.0
3657.0
N/C
69.7
42.7
-20.3
123.0
14.4
16.0
10.0
8.0
15.0
9.0
27.1
31.1
29.6
83.3
87.6
104.9
N/A
N/A
N/A
N/C
201.1
14.8
-4.8
181.4
5.2
19.7
N/C
N/C
N/C
179.3
261.0
348.6
312.2
649.8
734.7
864.7
N/A
N/A
N/A
N/C
45.6
33.6
-10.4
108.1
13.1
17.7
N/C
N/C
N/C

Shanghai Huizhong Automotive Manufacturing Co., Ltd.

Market Share: 0.8%
Shanghai Huizhong Automotive Manufacturing (SHAC) is a subsidiary of the Shanghai Automotive
Industry Corporation (Group) and manufactures automobile chassis and commercial vehicles. The
company was established in January 1992 and is located in Lujiazui Financial and Trading Zone in Pudong
district, Shanghai.
SHAC has one research and development center, 12 production bases and five joint ventures. The company
has more than 8,000 employees, of which 1,500 are technicians, and has an annual capacity of 300,000
units.
SHAC operates two businesses: commercial vehicle and car chassis manufacturing. The main commercial
vehicle brand is the Istana minivan series, but the company also manufactures auto-unloading vehicles,
trailers, trucks and mixing vehicles. Car chassis products include front axle and rear axle systems. Parts are
24
April 2014
supplied to Volkswagen Shanghai and GM Shanghai, and exported to GM and Ford in the United States
and other countries. The main component products include front and rear strut assemblies; front knuckle
with brake assemblies; sub frame pre-assemblies; rear axle assemblies; and pedal assemblies.
In 2013, SHAC was estimated to earn revenue of $2.3 billion, with an annualized growth rate of 16.5%
since 2007. Total company profit was estimated to total $102.5 million in 2010.
In 2006, the Automobile Manufacturing industry drove the development of the company and, as a result,
revenue increased 49.5%. The company also returned to profitability during the year due to strong sales
growth and stable pricing levels.
In March 2004, SHAC consolidated the domestic car chassis market and entered the international market.
The company focused on its commercial vehicle business, and as a result, revenue and total profit from
automobile parts declined in 2005
Shanghai Huizhong Automotive Manufacturing - financial performance

Year
2004
2005
2006
2007
2008*
2009*
2010*
2011*
2012*
2013*
Revenue
US Million Dollars
Growth
% change
EBIT
US Million Dollars
Growth
% change
Assets
US Million Dollars
Growth
% change
601.3
437.2
653.5
919.7
954.9
1131.9
1497.1
1766.6
1980.0
2300.0
N/C
-27.3
49.5
40.7
3.8
18.5
32.3
18.0
12.1
16.2
20.6
-28.4
1.2
-15.6
101.3
80.1
102.5
N/A
N/A
N/A
N/C
N/C
N/C
N/C
N/C
-20.9
28.0
N/C
N/C
N/C
462.0
459.8
482.2
763.0
652.9
631.7
712.8
N/A
N/A
N/A
N/C
-0.5
4.9
58.2
-14.4
-3.2
12.8
N/C
N/C
N/C

United Automotive Electronic Systems Co,. Ltd.

Market Share: 0.8%
United Automotive Electronic Systems (UAES) was founded in December 1995. The company is a joint
venture between Robert Bosch GmbH (50.0%) and Zhonglian Automotive Electronic System Co. Ltd.
(50.0%) with a total investment of $322.2 million and registered capital of $144.9 million.
Bosch is the largest automotive component manufacturer in the world. As one of the largest joint venture
companies in automotive components in China, UAES researches, develops and manufactures engine
management systems (EMS) and components, and electronic fuel injection (EFI) products.
UAES has five manufacturing factories in Shanghai, Wuxi, Xi'an, Wuhu and Liuzhou. The Shanghai factory
produces electronic controllers, idling modulators, speed sensors, pressure sensors, temperature sensors,
25
April 2014
and ignition coils. The Wuxi factory is mainly engaged in manufacturing injectors, pressure modulators
and fuel distribution tube assemblies. The Xi'an factory primarily manufactures electric fuel pumps, fuel
pump brackets and carbon canister control valves. In 2012, for the Wuhu production base, 31 production
lines have achieved batch production. It will contribute growth of company revenue in the following years.
In 2013, UAES generated revenue of $2.11 billion. During the year, the company had about 6,400 workers.
United Automotive Electronic System - financial performance

Year
Units
2004
2005
2006
2007
2008*
2009*
2010*
2011*
2012*
2013*
Revenue
US Million Dollars
Growth
% change
EBIT
US Million Dollars
Growth
% change
Assets
US Million Dollars
Growth
% change
352.2
357.6
454.8
615.2
1005.2
1049.5
1400.0
1469.9
1621.0
2114.6
N/C
1.5
27.2
35.3
63.4
4.4
33.4
5.0
10.3
30.5
102.9
73.8
85.7
91.5
250.1
318.7
425.6
N/A
N/A
N/A
N/C
-28.3
16.1
6.8
173.3
27.4
33.5
N/C
N/C
N/C
333.1
322.3
378.9
497.4
798.1
885.1
973.2
N/A
N/A
N/A
N/C
-3.2
17.6
31.3
60.5
10.9
10.0
N/C
N/C
N/C

Changchun FAWAY Automobile Components Co., Ltd.

Market Share: 0.7%
Changchun FAWAY Automobile Components (FAWAY) was established in 1993 with registered capital of
$25.5 million. It is located in Changchun city, Jilin province. FAWAY is the fifth-largest auto parts
manufacturer in China, with a relatively stable market share of about 0.5% of total industry revenue.
FAWAY is an automotive components supplier of the First Automobile Works (FAW) Group. Major
products are automotive seats, instrument panels, door trims, wheels, and ignition coils.
In 2013, FAWAY resumed its growth. Company revenue increased to $1.10 billion in the first three
quarters of the year.
In 2012, affected by slow growth in the domestic automobile market, FAWAY generated $1.22 billion, up
by just 12.6% over 2011. The company's profit declined by 8.5% to $74.0 million due to high operating
costs and low revenue growth.
In 2011, company revenue reached $1.1 billion, up 18.3% over 2010. Increasing operating costs offset much
of the company's profit, which decreased 14.0% from 2010.
In 2010, both revenue and total profit of the company experienced dramatic increases due to the
prosperous automobile market in China. FAWAY reported sales revenue of $913.2 million, and total profit
of $94.1 million, up 112.1% and 118.3% from 2009, respectively.
26
April 2014
In 2009, FAWAY continued to adjust its product structure, and increased investments in R&D and brand
building. The company reported revenue of $430.6 million. The company also reported total profit of $43.1
million.
In 2008, the company took on its current name; it was previously called Changchun FAW Sihuan
Automobile Co. Ltd. FAWAY completed the R&D of 12 new products in the year, including seats and
interiors. In addition, the company reinforced the degree of quality management, improving its product
quality. FAWAY realized sales revenue and total profit of $419.8 million and $22.9 million, respectively.
In 2007, both revenue and profit of FAWAY increased significantly due to surging domestic demand. The
company earned $401.4 million, up 33.6% from 2006. Total company profit totaled $5.9 million,
increasing strongly from 2006.
In 2006, company revenue totaled $300.5 million, up 13.1% for the year. However, as raw material prices
increased in 2005, the company only reported profit of $0.3 million for the year.
Changchun FAWAY Automobile Components - financial performance

Year
Units
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013*
Revenue
US Million Dollars
Growth
% change
NPBT
US Million Dollars
Growth
% change
Assets
US Million Dollars
Growth
% change
409.0
265.8
300.5
401.4
419.8
430.6
913.2
1080.1
1216.7
1097.0
N/C
-35.0
13.1
33.6
4.6
2.6
112.1
18.3
12.6
N/C
4.5
-14.3
0.3
5.9
22.9
43.1
94.1
80.9
74.0
58.3
N/C
N/C
N/C
1866.7
288.1
88.2
118.3
-14.0
-8.5
N/C
229.9
236.1
231.6
244.0
226.6
275.8
528.9
638.2
758.4
897.9
N/C
2.7
-1.9
5.4
-7.1
21.7
91.8
20.7
18.8
N/C

NOTE: *JANUARY TO SEPTEMBER
Other Players
Shaanxi Fast Gear Co. Ltd.
Estimated market share: less than 0.5%
Shaanxi Fast Gear (SFG) was established in Xian city, Shannxi province in September 2001. SFG's main
products are single and twin countershaft heavy-duty transmissions; power take-offs and transfer cases;
gears and various gear forgings; and automotive spare parts. SFG has annual output of 1 million units of
heavy-duty transmissions; 50 million gears of different types; and 100,000 tons of automotive forgings.
Gear products are exported to the United States, Germany, Japan, Australia, Belarus, South America,
Southeast Asia and other countries and regions. In 2011, SFG sold 701,200 units of transmissions and
generated revenue of $176.5 million. In 2012, SFG's sales volume decreased 35.5% to 452,000 units,
largely due to the slowdown in domestic heavy truck sales growth. On September 15th, 2013, with $81.3
April 2014
27
million of investment, SFG established Fast Auto Drive (Thailand) Company in Thailand. SFG further
expanded the international market
Dongfeng Motor Suspension Spring Co. Ltd.
Dongfeng Motor Suspension Spring was established in Xiangfan city, Hubei province, in January 2003.
The company originated from the leaf spring plant of Dongfeng Motor Corporation and specializes in the
production of automobile suspension springs. Its annual leaf spring output is nearly 50,000 tons. In 2011,
its revenue was estimated at $176.2 million.
Dongfeng Motor Suspension Spring mainly produces auxiliary car-assembling parts and components for
various vehicles of its parent company, Dongfeng. It also supplies auxiliary parts and components for
vehicles manufactured by other companies. Products include leaf springs, coiling springs, and torsion bars.
Its products have been exported to the United States, Italy, Canada, Philippines and other countries. In
2010, the company earned $192.7 million with leaf spring assembly output of 1.39 million units.
The company has established a suspension spring research department for designing and developing leaf
springs across all series. Processes used for leaf spring production include cold-hole punching, hot rolling,
medium frequency induction heating, pressure rotoblast, continuous fitting of assembly, assembly precompression, electrostatic painting, and infrared drying.
Shanghai Automotive Co. Ltd.
Shanghai Automotive was founded in 1925, and is a joint stock company solely owned by Shanghai
Automotive Industry Corporation Group (SAIC). The company was listed on the Shanghai Securities
Exchange in November 1997. In 2012, SAIC generated revenue of $75.8 billion, mainly from its automotive
manufacturing business, with total assets of $50.3 billion.
With support from SAIC, Shanghai Automotive has had continual capital expansions over the years. It has
expanded its business from the production of automotive parts to complete automobile manufacturing, as
well as businesses in the financial and information industries.
The company includes Yizheng Automotive, Automotive Gear Works, China Spring Factory, and Powder
Metallurgy Factory. It also has more than 20 complete automobile and automotive parts manufacturing
enterprises, including Shanghai General Motors.
Yanfeng Visteon Automotive Trim Systems Co. Ltd.
Yanfeng Visteon Automotive Trim Systems was established in 1994 with a total investment of $223.0
million and is headquartered in Shanghai's Caohejing Development Zone. The company is a 50:50 joint
venture of Shanghai Automotive Industry Corporation (Group) and Visteon International Holdings
Corporation.
Yanfeng Visteon has a factory in Shanghai's Anting area. The company also holds majority stakes in several
automotive trim and safety system manufacturing companies in Shanghai.
The company's main products include complete interiors (such as cockpit systems, door panel assemblies,
door pillars and head lining); exteriors (such as painted bumper and trims), seating systems; safety
April 2014
28
systems; and electronics systems. In 2011, the company generated total revenue of $5.47 billion, with
exports of $671 million.
Key customers of Yanfeng Visteon are Shanghai VW, Shanghai GM, FAW-VW, Dongfeng Citroen, Chang'an
Ford, Beijing Hyundai, Beijing Jeep, Chery, and BAIC Foton.
Xincheng Vehicle Parts Manufacturing Factory
Xincheng Vehicle Parts Manufacturing Factory was established in 1994. It is located in Zhongshan city,
Guangdong province. The company has over 400 employees and annual output of more than 10 million
sets of automotive parts.
Its main products are car alarm systems, motorcycle alarm systems and other power-assembly items. The
factory supplies products to Sanyo-Honda, Jialing-Honda, Duke-Suzuki, Qingqi-Suzuki, QuanchengSuzuki, Wangjiang-Suzuki, Zhufeng-Kymco, and Yamaha.
Dongfeng Motor Co. Ltd.
Dongfeng Motor (DFL) was established in June 2003, and is located in Wuhan city, Hubei province. It has
been involved in the Auto Part Manufacturing industry in China since 1999 as a department of Dongfeng
Motor Corporation. Dongfeng Motor Company started operating as an independent company in 2003 with
registered capital of $2 billion, invested by Dongfeng Motor Corporation (DFM) and Nissan Motors
Company with 50.0% equity per each party. Investments from DFM include existing assets from
subsidiaries and equities in relevant enterprises, while Nissan Motors Company provided cash at equal
value.
DFL is now one of the largest automobile and parts and accessories manufacturers in China with over
70,000 employees. DFL's products include commercial vehicles, passenger vehicles, components and
parts, and automotive equipment.
The company's parts and components business comprises 17 subsidiaries (specialized plants) located in
Hubei, Jiangsu, Qinghai, Shanghai and other areas across China.
April 2014
29
Operating Conditions
Capital Intensity
The level of capital intensity is medium.
The Automobile Parts and Accessories Manufacturing Industry in China requires a significant level of
capital investment
Production tends to rely on large investments in capital equipment
Large firms are highly automated and mechanized
Small-scale manufacturers tend to be less capital intensive than large manufacturers
Labor is also a significant input for this industry
The Auto Part Manufacturing industry in China has a medium capital intensity level. For every dollar spent
on wages (including management and administration costs and R&D), about 34 cents are invested in
capital.
Large-scale production requires significant capital for the installment of automated processes, equipment
and machinery. Significant investment is also needed to upgrade plant and equipment, and for process and
product development. Many manufacturing processes involve repetitive activities that are automated to
increase production speed and cost efficiency.
Small-scale manufacturers generally have lower capital investment levels than larger firms. This is due to
the high cost of acquiring new equipment, which larger firms are usually more able to afford. In addition,
small firms tend to produce relatively basic products.
Technology & Systems

The level of technology change is medium.
The technology and systems used by companies operating in the Auto Part Manufacturing industry in
China has advanced at a moderate rate in recent years.
Manufacturers' scientific research ability and technical innovation have been enhanced in recent years. In
the 1990s, firms lacked enough funds for research and development and technology was generally out of
date. With the industry's development, manufacturers raised funds for research and development and
adopted advanced technologies and systems.
Some manufacturers have adopted computer aided design and manufacture (CAD/CAM) systems. These
technologies continue to enhance production efficiency and the level and quality of products.
Manufacturing ability also increased through joint ventures and mergers. Some foreign enterprises entered
the China market through establishing joint-venture partnerships with local manufacturers. Several firms
also merged to improve the manufacturing ability and cost structure. Now, increasing numbers of foreign
enterprises have gained positions and market shares in the domestic market.
April 2014
30
Revenue Volatility
The level of volatility is medium.
Growth within China's Automobile Manufacturing industry has been strong in the past decade, and the
number of vehicles in use across China has increased significantly. This has driven significant growth in
the upstream Auto Part Manufacturing industry. Downstream auto manufacturing industries are diverse,
including complete automobiles, trucks, automobile bodies, modified motor vehicles, trailers, and trolley
manufacturing. Additionally, well-known foreign manufacturers have entered the China market and
stimulated strong and steady output growth in the current performance period.
Development of the second-hand automobile market also stimulates demand for automobile parts and
accessories. Meanwhile, growth in foreign demand in recent years has also expanded export growth.
Regulation & Policy

The level of regulation is medium and the trend is decreasing.
The automobile sector has been highly protected by the government, with high import tariffs and
regulations requiring production localization for complete automobile manufacturing and restrictions on
imports of parts and accessories. Domestic manufacturers find it difficult to obtain import qualification
even for high quality parts and accessories.
There are strict regulations concerning the ownership of companies in this industry. Foreign enterprises
wanting to enter the market and manufacture automotive parts and accessories in China must establish
joint ventures with domestic or foreign complete automobile manufacturers.
Firms in the industry are required to comply with government occupational health and safety regulations,
acts and other mandatory requirements for employees, contractors and factory visitors.
Firms are also subject to environmental laws and regulations dealing with noise, air and waste emissions,
as well as with the use, handling and disposal of hazardous materials and chemicals.
Industry Assistance
The level of industry assistance is high and the trend of industry assistance is decreasing.
There are no specific tariffs for this industry.
Since joining the World Trade Organization, China has been committed to opening its economy to the
world, reducing customs duties and canceling some non-customs duty measures. The average customs
duty of automobile parts and accessories decreased from 30.0% to 10.0%. Import quotas and permit and
licensing systems have also been cancelled. However, import tariffs still vary across products.
Item number 31 of the China Automobile Industry Development Policy states that the Chinese government
guides and supports the Auto Part Manufacturing industry. It encourages private capital investment in the
industry to help relatively advantageous enterprises become professional manufacturers and to further
enhance production output and supply ability.
High tariff rates can lead to some domestic firms being inefficient and reluctant to increase productivity.
This is due to the higher prices of imported automotive parts and accessories. This allows local firms to
increase their price, and provides no incentive to minimize costs.
31
April 2014
Key Statistics
Industry Data
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Revenue
($b)
IVA
($b)
78.3
99.2
133.6
176.5
223.1
292.2
339.2
385.8
441.1
496.3
550.7
606.8
664.2
725.9
790.3
20.2
25.4
36.2
45.9
57.0
73.3
83.8
94.4
106.6
119.2
131.7
144.6
158.2
171.8
185.9
Establishments
Enterprises
5,604
6,483
7,579
10,331
10,904
11,953
8,991
10,035
10,333
10,631
10,922
11,209
11,474
11,718
11,954
3,503
3,756
3,944
4,141
4,187
4,286
3,857
4,073
4,278
4,484
4,676
4,849
5,017
5,184
5,345
Employment
Exports
($b)
Imports
($b)
Wages
($b)
Total
Assets
(Billion
Dollars)
1,302
1,400
1,615
1,928
2,003
2,380
2,448
2,613
2,784
2,946
3,111
3,276
3,431
3,585
3,732
9.9
12.9
16.5
18.3
14.5
19.6
22.4
23.9
26.2
29.0
31.8
34.6
37.5
40.4
43.3
10.1
13.1
14.3
13.9
15.5
21.2
23.1
23.2
24.9
26.8
28.7
30.6
32.5
34.4
36.3
4.1
4.8
6.6
9.5
10.1
16.2
17.6
21.2
24.7
28.3
32.1
35.8
39.4
43.2
47.1
81
98
115
144
179
215
247
283
323
364
408
450
488
528
569
Employment
(%)
Exports
(%)
Imports
(%)
Wages
(%)
Assets
(%)
7.5
15.4
19.4
3.9
18.8
2.9
6.7
6.5
5.8
5.6
5.3
4.7
4.5
4.1
30.3
27.9
10.9
-20.8
35.2
14.3
6.7
9.6
10.7
9.7
8.8
8.4
7.7
7.2
29.7
9.2
-2.8
11.5
36.8
9.0
0.4
7.3
7.6
7.1
6.6
6.2
5.8
5.5
17.1
37.5
43.9
6.3
60.4
8.6
20.5
16.5
14.6
13.4
11.5
10.1
9.6
9.0
21.1
16.9
25.9
24.0
19.9
15.2
14.6
14.1
12.7
11.9
10.2
8.5
8.1
7.9
Annual Change
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Revenue
(%)
IVA
(%)
26.7
34.7
32.1
26.4
31.0
16.1
13.7
14.3
12.5
11.0
10.2
9.5
9.3
8.9
25.7
42.5
26.8
24.2
28.6
14.3
12.6
12.9
11.8
10.5
9.8
9.4
8.6
8.2
Establishments
Enterprises
(%)
(%)
15.7
16.9
36.3
5.5
9.6
-24.8
11.6
3.0
2.9
2.7
2.6
2.4
2.1
2.0
7.2
5.0
5.0
1.1
2.4
-10.0
5.6
5.0
4.8
4.3
3.7
3.5
3.3
3.1
32
April 2014
Key Ratios
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IVA/revenue
(%)
Imports/
demand
(%)
Exports/
revenue
(%)
Revenue per
employee
($'000)
Wages/
revenue
(%)
Employees
per est.
Average
wage
($)
25.8
25.6
27.1
26.0
25.5
25.1
24.7
24.5
24.2
24.0
23.9
23.8
23.8
23.7
23.5
12.9
13.2
10.9
8.1
6.9
7.2
6.8
6.0
5.7
5.4
5.2
5.1
4.9
4.8
4.6
12.6
13.0
12.4
10.4
6.5
6.7
6.6
6.2
5.9
5.8
5.8
5.7
5.6
5.6
5.5
60.1
70.9
82.7
91.6
111.4
122.8
138.6
147.7
158.4
168.5
177.0
185.2
193.6
202.5
211.8
5.2
4.8
4.9
5.4
4.5
5.5
5.2
5.5
5.6
5.7
5.8
5.9
5.9
6.0
6.0
232
216
213
187
184
199
272
260
269
277
285
292
299
306
312
3,149.0
3,428.6
4,086.7
4,927.4
5,042.4
6,806.7
7,189.5
8,113.3
8,872.1
9,606.2
10,318.2
10,928.0
11,483.5
12,050.2
12,620.6
Figures are inflation-adjusted 2014 dollars

NOTE: UNLESS SPECIFIED, AN ASTERISK (*) ASSOCIATED WITH
A NUMBER IN A TABLE INDICATES AN IBISWORLD ESTIMATE AND
REFERENCES TO DOLLARS ARE TO US DOLLARS.
Jargon
ALTERNATOR An electric generator or dynamo producing alternating currents.
ANTI-LOCK BRAKING SYSTEM (ABS) Prevents a vehicle's wheels from locking up under heavy braking.
GLOBAL POSITIONING SYSTEM (GPS) An electronic system that uses a network of satellites to indicate
on a computerized receiver the position of a vehicle, ship, or person.
April 2014
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Auto Parts Manufacturing in China: Ibisworld Industry Report

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IBISWorld Industry Report

Auto Parts Manufacturing in China

About This Industry ................................. 2

Industry Performance .............................. 4

Products & Markets ................................. 10

Barriers to Entry ........................................... 19

Major Companies .................................... 21

Supply Chain ................................................10

Operating Conditions .............................. 29

Competitive Landscape ........................... 16

Key Statistics ........................................... 31

Market Share Concentration .........................16

Capital Intensity ........................................... 29

www.ibisworld.com.cn | 1-800-330-3772 | chinahelp@ibisworld.com

Auto Parts Manufacturing in China

About This Industry

Auto Parts Manufacturing in China

Auto Parts Manufacturing in China

Key External Drivers

Auto Parts Manufacturing in China

Auto Parts Manufacturing in China

Auto Parts Manufacturing in China

Auto Parts Manufacturing in China

Auto Parts Manufacturing in China

Industry Life Cycle

Auto Parts Manufacturing in China

Products & Markets

Auto Parts Manufacturing in China

Products & Services

Electronic parts and accessories

Mechanical parts and accessories

Mechanical parts and accessories

Auto Parts Manufacturing in China

Auto Parts Manufacturing in China

Auto Parts Manufacturing in China

Middle South China

South West China

North East China

North West China

Middle South China

South West China

North East China

North West China

Middle South China

South West China

North East China

North West China

Auto Parts Manufacturing in China

Auto Parts Manufacturing in China

Key Success Factors

Auto Parts Manufacturing in China

Cost Structure Benchmarks

Management and Administration

Tax and Interest

Auto Parts Manufacturing in China

Auto Parts Manufacturing in China

Barriers to Entry checklist

Auto Parts Manufacturing in China

Enterprises by ownership type (2014)

Revenue share Enterprise share

Auto Parts Manufacturing in China