"Fact has shown that several years ago, we transferred part of our business to China, and it was the right decision. Tires produced in China are highly competitive in the U.S. market. Even when including transportation costs, their retail prices are still lower than those made in Ohio. The factory price is even more attractive," said Scott Tucker, vice president of Danman Tire Manufacturing Co. in Ohio.
As raw material prices such as steel and oil have surged, an increasing number of multinational companies, like Danman, have begun to focus on the Chinese market. According to a recent report by BearingPoint Management Consulting, with major auto parts suppliers like Delphi, Visteon, Tianhe, and Lear expanding their investments in China, the scale of the automotive parts industry is expected to grow by 165% by 2010, reaching approximately 800 billion yuan. This will make China the largest investor in the global auto parts sector.
Multinational giants have established numerous joint ventures or wholly-owned companies in China, capturing a significant share of the market, especially in high-tech and high-end sectors. Delphi, which filed for bankruptcy protection in the U.S., is thriving in China, operating 14 manufacturing plants with over $450 million in total investment and producing more than 40 product categories. Since 1994, it has grown at an average annual rate of 24%, with consolidated revenues exceeding $600 million last year.
Visteon, another North American auto parts giant, operates a joint venture in Shanghai, Yanfeng Visteon Automotive Trim Systems, with a total investment of $223 million. It also controls other subsidiaries and has its Asia-Pacific headquarters in Shanghai. Bosch, one of the earliest foreign component manufacturers in China, has set up 10 representative offices, 7 wholly-owned enterprises, and 10 joint ventures across the country, covering various automotive systems.
As Japanese automakers expanded into China, their suppliers followed suit. After Toyota’s joint venture in Tianjin, Denso and Aisin Seiko also opened factories there. Similarly, Honda’s entry into Guangzhou led to Japanese suppliers establishing production bases in Guangdong. With the rise of Chinese auto demand, many foreign parts companies have chosen China as their strategic base.
China has become a preferred destination for low-cost production. Global procurement strategies have driven parts companies to operate independently and scale up. However, rising material costs have created challenges, leading some companies to shift production to cost-effective regions like China. As a result, many international suppliers have either set up local production or included China in their global procurement plans.
This trend has helped Chinese companies integrate into the global economy. Over 500 foreign-invested auto parts companies now operate in China, with most leading global firms having established joint ventures. As domestic production grows and R&D capabilities improve, Chinese firms are increasingly exporting products and supporting foreign companies through global procurement.
In 2005, Kazakhstan Copper Group planned to produce 460,000 tons of refined copper, a 7.7% increase from the previous year, with a value of $1.5 billion. Zinc output was set at 105,000 tons, with all zinc metal intended for export to Europe. The Balhasz Zinc Plant, completed in 2004, had an annual capacity of 105,000 tons. The company also built a sulfuric acid plant, with a capacity of 1.2 million tons per year, supplying key national industries.
Kazakhstan Copper Group invested $180 million in 2004, with $86 million used for new mine development and equipment. These efforts highlight the growing role of emerging markets in the global supply chain.
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