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1: The main data
The following is statistics on the export value of auto parts and all automotive products in China since 1991 (see Table 1).
It is not difficult to see that in the past 15 years, the export value of China's auto parts has continued to grow, and it has been growing particularly fast since the accession to the WTO. The annual growth rate is about 3%. At the same time, the proportion of export value of auto parts in the export of all auto products has also increased year by year, reaching more than 8% in 25 years, and it is the absolute main force for the export of auto products in China.
2: Export direction and product type
From the export perspective, the United States, Japan, the European Union and other developed countries and auto-producing countries are major exporters of auto parts in China. At the same time, the development of some emerging markets such as the Middle East, South America, and Africa has also achieved results. The phenomenon of establishing factories abroad and acquiring foreign companies has also emerged.
In the aspect of export products, the main products are labor-intensive, medium- and low-tech products, bases, bumpers, wire harnesses, glass, brake pads, clutches, heat sinks, mufflers, and universal joints. These products have traditional comparative advantages. Exports account for a very high percentage. The export of high-tech parts and components also has certain development, but most of the core technologies are still in the hands of large international component manufacturers.
3: At present, China's automobile exports mainly have the following four channels
The first channel is to follow the vehicle export, that is, to adhere to the entire vehicle company to enter the international market. Take liberation of FAW as an example, foreigners usually choose the vehicle model of the entire vehicle first, and then they will go to the engine factory for inspection and finally export it together. This is a method that more domestic products are used for export.
The second channel is foreign direct purchases from China, that is, through the global procurement system of multinational car companies to enter the international market.
The third channel is direct foreign sales of production companies. By acting as a second-tier supplier in foreign markets, the products will be exported directly to foreign countries to ensure the continued growth of exports.
The fourth channel is to rely on foreign trade companies. Professional foreign trade companies have long been engaged in import and export business, are familiar with products and markets, have fixed sales channels, and are able to grasp the dynamics of the international market in a timely manner. At the same time, they have very smooth channels for organizing goods, so they have advantages.
The main competitiveness of China's auto parts exports
1: Cost advantage
1. Low labor costs.
The low labor cost advantage is very important for the formation of the international competitiveness of the auto parts industry. China not only has a low-cost labor force, but also has a large team of skilled technicians. The low labor cost makes China's competitive advantage in labor-intensive components products very obvious. The advantage of labor force is the biggest competitive advantage of China's current auto parts exports.
2. Land cost advantage.
China is in the mid-stage of industrial development. Land prices are at a relatively low level compared with other countries in developed countries and even Southeast Asia. In addition, in order to promote industrial development in the region, especially to attract multinational corporations to local development, various localities have also introduced various policies to reduce land use prices. Moreover, China's vast central and western regions and old industrial areas in Northeast China have yet to be developed and revitalized, which is also conducive to China's sustainable low-cost advantages in terms of land resources.
2: The active introduction of foreign capital
China attaches great importance to the introduction of foreign capital and gives foreign investors great preferential treatment in terms of tax rate, investment environment, and protection of foreign equity. This not only enhances the income of foreign investment in China, but also greatly reduces its investment risk, thus making a large number of foreign investors, especially large multinational companies, willing to invest in China.
Whether a foreign investment can be transformed into an expansion of exports depends on whether it is export-oriented or not. With the change of the life cycle, auto parts have entered the standard production period. At this time, the key is the cost of production. As mentioned in the above two factors, China’s advantages in manufacturing costs are very obvious. Therefore, many world-renowned auto parts companies have established several joint ventures and wholly-owned enterprises in China and have used China as their horizontal integration component. The production base transports parts to its entire vehicle production base that distributes around the world. At the same time, the entry of these giants of parts and components has led major auto manufacturers to set up procurement centers in China.
3: The scale advantages brought by the rapid development of the automotive industry
China's automobile industry is entering a high-speed development stage, and the output of automobiles is increasing year by year. The scale of production of auto parts and components in China is increasing. The increase in the production and sales volume of domestic autos brings with it year-on-year expansion of auto parts demand, which will result in economies of scale both internally and externally, and reduce the average cost of products.
From an internal point of view, large-scale production can increase the utilization rate of production lines and implement professional division of labor, thereby increasing production efficiency and saving management costs. On the outside, large-scale production can also establish stable production and technical links with other manufacturers. Raise the negotiation bargaining power with raw material suppliers, enhance the customer's trust in the company's products, and so on.
4: Advantages of late
This mainly refers to the technology, a country in the process of industrial development, if the previous period is in a backward position, there is more room for rapid growth by imitating the developed countries. After entering the country, it can introduce foreign advanced equipment, technology, management, talents, funds needed for development, and even advanced development models, improve individual strength and industrial competitiveness as soon as possible, implement a catch-up strategy, and achieve large-scale export.
China, as a rising manufacturing country, has the advantage of taking advantage of its latecomer advantage in the context of the global development of auto parts and the international division of labor.
5: Customs advantage
The auto industry is still a protected key industry in foreign countries. Foreign governments are now more willing to accept the point of view of new protectionism: to give strong support to their own industries that have advantages, and to promote their exports in order to increase domestic employment and increase national income. Tariffs are a weapon in their hands.
As for the tariff protection of the automobile manufacturing industry, foreign countries usually adopt a waterfall-type tariff system, that is, a lower tariff is imposed on the import of raw materials and parts, and the nominal tax rate on automobile imports is higher, which makes it possible to use imported components. The effective protection rate of the final product is much greater than the nominal protection rate. For China’s spare parts exports, such low-tariff policies are undoubtedly a great advantage without discriminatory tariffs.
The following is statistics on the export value of auto parts and all automotive products in China since 1991 (see Table 1).
It is not difficult to see that in the past 15 years, the export value of China's auto parts has continued to grow, and it has been growing particularly fast since the accession to the WTO. The annual growth rate is about 3%. At the same time, the proportion of export value of auto parts in the export of all auto products has also increased year by year, reaching more than 8% in 25 years, and it is the absolute main force for the export of auto products in China.
2: Export direction and product type
From the export perspective, the United States, Japan, the European Union and other developed countries and auto-producing countries are major exporters of auto parts in China. At the same time, the development of some emerging markets such as the Middle East, South America, and Africa has also achieved results. The phenomenon of establishing factories abroad and acquiring foreign companies has also emerged.
In the aspect of export products, the main products are labor-intensive, medium- and low-tech products, bases, bumpers, wire harnesses, glass, brake pads, clutches, heat sinks, mufflers, and universal joints. These products have traditional comparative advantages. Exports account for a very high percentage. The export of high-tech parts and components also has certain development, but most of the core technologies are still in the hands of large international component manufacturers.
3: At present, China's automobile exports mainly have the following four channels
The first channel is to follow the vehicle export, that is, to adhere to the entire vehicle company to enter the international market. Take liberation of FAW as an example, foreigners usually choose the vehicle model of the entire vehicle first, and then they will go to the engine factory for inspection and finally export it together. This is a method that more domestic products are used for export.
The second channel is foreign direct purchases from China, that is, through the global procurement system of multinational car companies to enter the international market.
The third channel is direct foreign sales of production companies. By acting as a second-tier supplier in foreign markets, the products will be exported directly to foreign countries to ensure the continued growth of exports.
The fourth channel is to rely on foreign trade companies. Professional foreign trade companies have long been engaged in import and export business, are familiar with products and markets, have fixed sales channels, and are able to grasp the dynamics of the international market in a timely manner. At the same time, they have very smooth channels for organizing goods, so they have advantages.
The main competitiveness of China's auto parts exports
1: Cost advantage
1. Low labor costs.
The low labor cost advantage is very important for the formation of the international competitiveness of the auto parts industry. China not only has a low-cost labor force, but also has a large team of skilled technicians. The low labor cost makes China's competitive advantage in labor-intensive components products very obvious. The advantage of labor force is the biggest competitive advantage of China's current auto parts exports.
2. Land cost advantage.
China is in the mid-stage of industrial development. Land prices are at a relatively low level compared with other countries in developed countries and even Southeast Asia. In addition, in order to promote industrial development in the region, especially to attract multinational corporations to local development, various localities have also introduced various policies to reduce land use prices. Moreover, China's vast central and western regions and old industrial areas in Northeast China have yet to be developed and revitalized, which is also conducive to China's sustainable low-cost advantages in terms of land resources.
2: The active introduction of foreign capital
China attaches great importance to the introduction of foreign capital and gives foreign investors great preferential treatment in terms of tax rate, investment environment, and protection of foreign equity. This not only enhances the income of foreign investment in China, but also greatly reduces its investment risk, thus making a large number of foreign investors, especially large multinational companies, willing to invest in China.
Whether a foreign investment can be transformed into an expansion of exports depends on whether it is export-oriented or not. With the change of the life cycle, auto parts have entered the standard production period. At this time, the key is the cost of production. As mentioned in the above two factors, China’s advantages in manufacturing costs are very obvious. Therefore, many world-renowned auto parts companies have established several joint ventures and wholly-owned enterprises in China and have used China as their horizontal integration component. The production base transports parts to its entire vehicle production base that distributes around the world. At the same time, the entry of these giants of parts and components has led major auto manufacturers to set up procurement centers in China.
3: The scale advantages brought by the rapid development of the automotive industry
China's automobile industry is entering a high-speed development stage, and the output of automobiles is increasing year by year. The scale of production of auto parts and components in China is increasing. The increase in the production and sales volume of domestic autos brings with it year-on-year expansion of auto parts demand, which will result in economies of scale both internally and externally, and reduce the average cost of products.
From an internal point of view, large-scale production can increase the utilization rate of production lines and implement professional division of labor, thereby increasing production efficiency and saving management costs. On the outside, large-scale production can also establish stable production and technical links with other manufacturers. Raise the negotiation bargaining power with raw material suppliers, enhance the customer's trust in the company's products, and so on.
4: Advantages of late
This mainly refers to the technology, a country in the process of industrial development, if the previous period is in a backward position, there is more room for rapid growth by imitating the developed countries. After entering the country, it can introduce foreign advanced equipment, technology, management, talents, funds needed for development, and even advanced development models, improve individual strength and industrial competitiveness as soon as possible, implement a catch-up strategy, and achieve large-scale export.
China, as a rising manufacturing country, has the advantage of taking advantage of its latecomer advantage in the context of the global development of auto parts and the international division of labor.
5: Customs advantage
The auto industry is still a protected key industry in foreign countries. Foreign governments are now more willing to accept the point of view of new protectionism: to give strong support to their own industries that have advantages, and to promote their exports in order to increase domestic employment and increase national income. Tariffs are a weapon in their hands.
As for the tariff protection of the automobile manufacturing industry, foreign countries usually adopt a waterfall-type tariff system, that is, a lower tariff is imposed on the import of raw materials and parts, and the nominal tax rate on automobile imports is higher, which makes it possible to use imported components. The effective protection rate of the final product is much greater than the nominal protection rate. For China’s spare parts exports, such low-tariff policies are undoubtedly a great advantage without discriminatory tariffs.