The relationship between domestic parts companies and vehicle companies needs to be adjusted

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Recently, when interviewed by reporters, many experts emphasized that "there are serious problems in the relationship between China's auto parts companies and vehicle companies, hindering the development of the Chinese auto industry."

What are the problems with the relationship between auto parts companies and vehicle manufacturers in China?

Experts agreed that: "The relationship between Chinese auto parts companies and vehicle companies is far from meeting the requirements for the development of China's entire vehicle industry, and it is far from meeting the requirements of the development of China's auto parts industry. It is a very serious practical issue."

Experts pointed out: “The reasons for this serious and realistic problem are manifold. One of the main reasons is that there is no scientific and professional division of labor and collaboration between Chinese vehicle companies and parts and components companies. There is no effective one. The coordination mechanism for competition and cooperation did not establish a relationship that conforms to the development laws of the automobile industry."

China's auto industry was born in the era of planned economy. Every time a single vehicle company is built, it is necessary to build a batch of parts and components companies that are matched with it, and one large and small, full-scale auto company emerges one after another. Among these all-round auto companies, the parts and components companies are completely subordinate to the vehicle companies in terms of assets, and they are only the cost center of the entire vehicle company. Under such a relationship, the capital, technology, and human resources of the parts and components companies are completely controlled by the vehicle companies. This relationship is called "old relationship."

In the era of market economy, China has emerged a number of independent auto parts companies. These independent auto parts companies do not have any connection with the vehicle companies in terms of assets, so it is difficult to share the market with the parts and components companies in the all-round enterprises. This relationship is called "new relationship."

The coexistence and interaction of the "old relationship" and the "new relationship" led to the formation of a closed-structure model in which Chinese auto companies have a complete vehicle company as the core and multi-layered parts companies are surrounded by diversification: the core is the entire vehicle company, followed by close Parts enterprise layer, backbone component enterprise layer, and collaborative enterprise layer. For example, there are currently more than 200 parts and components companies in a large domestic automobile company; these parts and components companies are located in more than 10 industrial sectors across the country, and together with vehicle companies, they form a closed organizational structure.

The tight parts company is a direct professional factory and wholly-owned subsidiary of the entire vehicle company. Vehicle companies have full control of the tight parts companies.

The backbone component companies have relatively independent legal personality, and their production activities obey the overall deployment of the entire vehicle company. The entire vehicle company generally controls the backbone component enterprises by way of equity participation and holding.

Between the vehicle company and the collaboration enterprise is the contractual relationship between procurement and supply.

The drawbacks caused by the above closed-structure model:

The cross-regional and cross-industry mergers and acquisitions, restructuring of assets, and the scale and quality of Chinese auto parts companies and vehicle companies have often become empty talks.

All automobile companies are self-contained, resulting in a small and large number of Chinese auto parts companies, and parts production capacity exceeds the demand for vehicle production. In the event of oversupply of auto parts, there is little room for bargaining by parts and components companies. In addition, independent parts and components companies are not supported by vehicle companies in terms of funds. The result must be that the profitability of parts and components companies is low and development is very difficult. .

The entire vehicle company and parts and components companies are basically a passive cooperative relationship in product development, and information flow from one vehicle company to another is one-way. The degree of cooperation is very low. Therefore, China's auto parts technology development capability is poor. According to experts' estimation, China's auto parts technology is at least 20 years behind the developed countries.

The marketing concepts and marketing methods of some auto parts companies in China are backward, and it is difficult to adapt to the requirements of the development of the market economy.

Experts unanimously appealed: "Under the trend of economic globalization, the relationship between Chinese auto parts companies and vehicle companies needs to be adjusted."

Some experts suggested that: "China's vehicle companies and parts and components companies must establish the concept of competition for the world, follow the trend of the development of the world's auto industry, to break the 'big and full', 'small and all' closed structure, As soon as possible, a complete vehicle company and parts and components company with a monopoly position in the country will be formed."

Some experts maintain that: China’s vehicle companies and parts and components companies should adopt a multi-tiered contracting system and divide the parts and components companies into first-level parts and components companies according to the following three conditions: assembly components, slightly processed assembly components, and simple processing components. The second-level parts and components companies and third-level parts and components enterprises are subcontracted in layers, and finally the parts and components of the parts and components companies at all levels are integrated into the entire vehicle company for final assembly, forming a cooperation-based subcontracting and subcontracting model. In this way, it can not only promote the systematic, modular and integrated development of parts and components companies, but also promote the development of the entire automotive industry.

Some experts believe that enterprises are the main body of the market economy, and the market is the dominant force in regulating business operations. However, this does not mean that the government does nothing in the economic regulation and control. The government should formulate a series of macro-control policies, encourage or restrict them, and guide enterprises to jump out of the narrow local interest circle, and implement special preferential policies on mergers and acquisitions and restructuring of auto parts enterprises in taxation, loans, and other aspects.

Some experts said: "China's auto industry should speed up the integration of some of its parts and plants from a number of all-round auto companies to peel off, the implementation of strong alliances, will be a strong car companies together, the strong parts companies to join together With assets as the link, through capital operation methods such as restructuring, mergers, equity participation, new shares issuance, directional expansion and share allotment, and leasing, the company will optimize the allocation of assets and resources and form a truly enterprise group. The combination of fusion technology enables component companies to advance ahead of the development of vehicle companies and establish a joint fleet with a large enterprise as its core."

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