Shanghai Today
China will have global car parts giants like Bosch in next decade, Bosch China head says - December 19, 2023
中国将在下一个十年诞生像汽车零件巨头博世一样的公司
China will have auto parts and components companies of global influence similar to German engineering giant Bosch in the next ten years as China’s car industry continues to go from strength to strength, the president of Bosch China said recently to Yicai.
“China’s automobile exports rank first globally, and the next thing the country will do is localize production in different parts of the world, which is an opportunity for Chinese car parts and component manufacturers to seize a bigger share of the global market,” said Chen Yudong, who is due to retire on Jan. 1.
“Chinese companies are no longer looking up to the global automobile industry but are on par with it," said Chen, who has witnessed huge changes in the country’s automobile industry in the past three decades.
“Before, owning a car used to be a luxury but now it is a must-have item. China’s automobile industry was weak and now it is strong. It used to lag behind the rest of the world in engines and gearboxes and now it is a world-leader in electric and intelligent vehicles,” he added.
“I always tell Bosch and its board of directors not to underestimate Chinese suppliers,” said Chen who worked in the US for years before he returned to China in 1998 to work for Delphi Auto Parts Group before joining Gerlingen-based Bosch.
Vehicle manufacturers need to be more tolerant of other industries encroaching on their turf. Tech firms such as Xiaomi Corp. and Huawei Technologies are making a foray into electric cars and although this is having a huge impact on the automobile industry, carmakers must embrace it, Chen said. Vehicle manufacturers also need to cooperate with smartphone manufacturers rather than making their own mobile phones.
Survival of the Fittest
Competition in China’s automobile market is extremely fierce, Chen said. Around 80 percent of Chinese vehicle manufacturers will close down or merge with another company in the next five years, and so will those in the supply chain, he said. Elimination will probably start from 2025 and end in 2030.
Automakers stress independent research and development as well as being in control. Suppliers should respect their choices and try to adapt to them. They should separate software and hardware, and provide clients with different solutions rather than just being hardware suppliers.
There is often a power struggle between headquarters and regional firms, Chen said. International parts makers that value the Chinese market need to give their Chinese teams more power and freedom.
Bosch China has recently formed a new business unit following the philosophy of “software defines automobiles” and has retained its smart driving and control business unit, Chen said. It has adjusted its chassis control business, steering division and power system segment as well as merged its seat, doors, windows and powertrain drives units into the electric drive division.
Bosch China will probably post revenue of CNY140 billion (USD20 billion) this year and this is expected to double by 2030, he said.
Source: Yicai Global
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