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1
THE AUTOMOTIVE AND CONSTRUCTION EQUIPMENT INDUSTRY
CHINA
Fact Pack
Swedish Trade Council in China
2006
2
Overview Chinese Manufacturing Industry
Chinese Automotive Industry
Chinese Construction Equipment Industry
Recommendations
References
CONTENT
3
0 500 1000 1500 2000 2500
ElectricalMachinery
Chemicals
Automotive
Ferrous Metals
CommunicationEquipment
• The total turnover of the Chinese manufacturing industry is SEK 15,107 billions.
• the Swedish manufacturing industry’s turnover is SEK 1,357 billions.
• There are approximately 203 000 companies within the manufacturing industry in China-56 million employees
• The automotive industry has good growth prospects. The main reasons are low labour costs, expected quality improvements, low car ownership rates and a rapidly growing economy with increased personal incomes.
• The average wage for an industry worker in China is SEK 5.2 per hour
5 largest manufacturing industries in China
Billion SEK
The automotive industry amount to 8 % of the total manufacturing industrySource: China statistical yearbook 2005, China Machinery Industry Federation, Automobile Component Industry Trends Report
CHINESE MANUFACTURING INDUSTRY IS 11 TIMES LARGER THAN THE SWEDISH - the automotive sector has good growth prospects
4
Overview Chinese Manufacturing Industry
Chinese Automotive Industry
Passenger Cars
Commercial Vehicles
Suppliers
Chinese Construction Equipment Industry
Recommendations
References
CONTENT
5
THE CHINESE SALES OF CARS AND COMMERCIAL VEHICLES TOTALS SEK 508 BILLION 2004- the automotive industry grew more than 12 % 2004
0
500
1000
1500
2000
2500
2000 2001 2002 2003 2004
Domestic Export
Engines SEK 31 billion
Special vehicles
SEK 62 billion
Accessories of automobiles and motorcycles SEK 182 billion
Billion SEK Sales of automotive industry products in China
Source: China Automobile Industry yearbook 2005, China Statistical Yearbook 2005
Cars and commercial vehicles SEK 508 billion
Motorcycles SEK 64 billion
The automotive industry has been growing steadily
6
5.8 MILLION VEHICLES ARE PRODUCED IN CHINA- 2.78 million passenger cars and over 3 million commercial vehicles
VEHICLE MANUFACTURERS
7 manufacturers FAW Group Jie Fang Shanghai Automotive
Industry Corp (SAIC) Chang’an Dongfeng Motor Co. (DFM) Beijing Automotive Industry
Holding (BAIC) Hafei Changhe-Suzuki
LIGHT TRUCKS(1,150,000 vehicles)
6 manufacturers FAW SAIC Chang’an DFM Xiamen King Long Changhe-Suzuki
BUSES( 1,170,000 vehicles*)
HEAVY TRUCKS(700 000 vehicles*)
7 manufacturers FAW DFM SAIC China National Heavy
Duty Truck (JV Volvo) BAIC Shaanxi Automotive Group Qing Ling Auto Group
COMMERCIAL VEHICLES (5,800,000 vehicles)
PASSENGER CARS(2,780,000 vehicles)
30 manufacturers FAW Group
(JV,Volkswagen,Toyota) SAIC (JV GM, Volkswagen) Chang’an (JV Ford) DFM (JV Nissan) BAIC (JV Honda, BMW,
Hyundai) Guangzhou Automobile
Industry Group (JV Honda& Toyota)
Brilliance (JV BMW)
, China automotive industry Yearbook 2005 www.eiu.com,, www.chinabuses.com, www.globalautoindex.com, csm worldwide
Many groups hold joint ventures with foreign players
• China’s vehicle production is projected to grow at 15% per annum to hit 8 million vehicles in 2008.
7
Overview Chinese Manufacturing Industry
Chinese Automotive Industry
Passenger Cars
Commercial Vehicles
Suppliers
Chinese Construction Equipment Industry
Recommendations
References
CONTENT
8
THE PASSENGER CAR PRODUCTION IN CHINA IS GROWING FAST -About 4 million passenger cars were produced in 2005
Passenger car production grew up by ”million” for the last five years. More and more international automotive
manufactures march into Chinses market by set up producion JVs with the Chinese manufacturers.( Volkswagen with FAW and SAIG, Honda and Toyato with GAIG, DFM and Nissan, Ford with ChangAn, etc.)
More private or collective capitals invested into automotive industry to manufacture self-owned brand automotives, such as: Chery, Great Wall and Geely,etc.
0
1000000
2000000
3000000
4000000
5000000
6000000
2001 2002 2003 2004 2005
Passenger Car Production in China Development the last 5 years
Vehicles
Source: Report and Statistics from China Automotive Industry Association
9
Passenger cars
Passenger cars
Passenger cars
Passenger cars
Passenger cars
Passenger cars
Business
HQ, Chongqing, China28,000Chang‘an Automobile
HQ, Guangzhou, China45,000GAIG
Guangzhou Automobile Industry Group Co.,Ltd
HQ, Beijing, China50,000BAIC
Beijing Automotive Industry Holding Co., Ltd
HQ, Shanghai, China63,000SAIC
Shanghai Automotive Industry Corporation
HQ, Wuhan, Hebei Province, China
106,000DFM
Dongfeng Motor Corporation
HQ, Changchun, Jilin Province, China
132,400FAW
Purchase decisionsEmployeesManufacturer
THE LARGEST PASSENGER CAR MANUFACTURERS MAKE THEIR PURCHASE DECISIONS IN CHINA
Pass
enge
r Car
s
6 largest companies for passenger cars in China
Source: Corporate websites
10
THERE ARE AROUND 67 CAR MANUFACTURING PLANTS IN CHINA- FAW and SAIC produce the most
56,000130,00049,000
Chang’an AutoChang’an Ford (Volvo)SuzukiBuses, Light Trucks, Cars
Chongqing Jiangbei#1 Chongqing Bei Xin #2 Chongqing Yu Dong #3
Chang’an
267,000160,000387,00085,000
General MotorsVolkswagenVolkswagen/GMCheryCars, Buses, Light Trucks
Liuzhou #1,Shanghai #2Shanghai I,II,III,IV #3-6Yantai #7
SAIC
28,00016,000
185,000
Beijing JeepBeijing FutianBeijing HyundaiCars, Light Trucks, Buses
BDA #1 Beijing #2Futian #3Tianzu #4 (10 plants altogether)
BAIC
57,00015,00095,00042,000
102,000
Nissan,RenaultHondaPSANissanYudea-KiaTrucks, Buses, Cars
Huadu #1Wantong #2Wuhan #3Xiangfan #4Yancheng #5
DFM
340,00012,00062,000
8,00031,00010,00091,000
124,000
FAW car, Fengyue,Volkswagen, AudiHainan MotorFAW HuataiToyotaTianjin HualiToyotaTianjin XialiCars, Buses, Heavy & Light Trucks
Changchun #1Changchun II #2Haikou #3Rongcheng #4Tianjin Tanggu #5Tianjin Lilou #6Tianjin Mazhuang #7Tianjin Zhong bei #8etc
FAW
Models and focus Production volume
Plant
(Around 67 in total)
Manufacturer
Source: Magazine Automobil Produktion, China Daily, www.globalautoindex.com, Corporate websites
The 5 largest OEM car manufacturers in China
11Source: STC analysis
Global integration increases – more cooperation between foreign and Chinese players Local protection is decreasing, but still existing
R&D
Market and Competition
Globalization
Market is optimistic, car sales is expected to grow at 5-7% annually till 2010 Competition is tougher, with Japanese/Korean cars taking share from
European/American cars Locals are expected to grow fast, especially Chery and Geely
Most foreign R&D takes place offshore, due to the IPR issue Local companies are spending a lot of efforts on R&D
COOPERATION BETWEEN FOREIGN AND CHINESE PLAYERS IS INCREASING
Trends within the Chinese passenger car industry
12
Overview Chinese Manufacturing Industry
Chinese Automotive Industry
Passenger Cars
Commercial Vehicles
Suppliers
Chinese Construction Equipment Industry
Recommendations
References
CONTENT
13
LIGHT TRUCK PRODUCTION REACHES ALL TIME HIGH - due to need for Chinese economic development
0
500000
1000000
1500000
2000000
2500000
2001 2002 2003 2004 2005
Light Trucks Heavy Trucks Buses
Commercial Vehicle Production in China Development the last 5 years
Vehicles Light truck made up the main part of commercial vehicle production in the last 5 years.
Steady Chinese economic growth have drawn the need for commercial vehicles, leads to the prodution growth.
Heavy truck and light truck production shrinked in 2005 because of the saturation of the market.
.
Source: Report and Statistics from China Automotive Industry Association
14
HQ, Chongqing, ChinaLight trucks
buses
28,000Chang’an Automobile
Heavy trucks
Light trucks.
Busses
Light trucks
Tractors
Buses
Light truck, Heavy trucks
Semi-trailer,
Buses
Heavy trucks
Light trucks
Buses
Business
HQ, Jinan, Shandong, China24,000SINOTRUK
China National Heavy Duty Truck ( JV Volvo)
HQ, Beijing, China50,000BAIC
HQ, Shanghai, China63,000SAIC
HQ, Wuhan, Hebei Province, China106,000DFM
HQ, Changchun, Jilin Province, China132,400FAW
Purchase decisionsEmployeesManufacturer
THE LARGEST MANUFACTURERS OF COMMERCIAL VEHICLES MAKE ALL PURCHASE DECISIONS IN CHINA - Sino Truk and Volvo partner in making heavy trucks
Com
mer
cial
veh
icle
s
Source: Corporate websites
15
Hong Kong
CHINESE COMMERCIAL VEHICLES MANUFACTURERS ARE MOSTLY CONCENTRATED ALONG THE COAST AREAS
320,000Dongfeng TrucksLaunch of Nissan heavy trucks 2006
Hubei, ShiyanWuhanZhengzhou
DFM
60,000Volvo, SinotrukHeavy Trucks
JinanChina National Heavy Duty Truck
267,000SAIC-GM Wuling Mini Bus and Mini Truck
LiuzhouSAIC
118,000Changhe Carry Bus and Carry Truck
JingdezhenChanghe-Suzuki
FAW Jiabao Bus and Truck
Songhuajing China-ItalyZhongyi Bus andTruck
Chang’an Carry Bus and TruckJiangling Light Truck
Models and focus
121,000JilinFAW
241,000Harbin Hafei
349,000
84,000
Chongqing JiangbeiNanchang
Chang’an
Production volume
PlantManufacturer
The 7 largest commercial vehicle OEM manufacturers in terms of produced units
Source: Magazine Automobil Produktion, www.globalautoindex.com, Corporate websites
16Source: STC
It is estimated that China will have 20 more years of commercial car growth, with the rate to be 1.2-1.5 times GDP
Truck will double its sales in 10 years, although it’s at a low season currently Bus is facing fierce competition from other alternatives – e.g. flights and trains
R&D
Competition
Market
Few foreign investors has actively entered the market Volvo and Mercedes-Benz has investments on bus already
Main competition comes from domestic companies, FAW and Dongfeng take main truck share
Local companies are spending a lot of efforts on R&D
DOMESTIC COMPANIES ARE THE MAIN PLAYERS ON THE CHINESE MARKET - only Volvo and Mercedes have invested in China
Trends within the Chinese commercial vehicle industry
17
Overview Chinese Manufacturing Industry
Chinese Automotive Industry
Passenger Cars
Commercial Vehicles
Suppliers
Chinese Construction Equipment Industry
Recommendations
References
CONTENT
18
THERE ARE MORE THAN 100,000 AUTOMOTIVE SUPPLIERS IN CHINA
There are more than 100,000 suppliers for the automotive industry in China.
All the large automotive suppliers in the world (if you look at the turnover) are presented in China.
Automotive suppliers are mainly concentrated in location of East China.
All the foreign automotive suppliers are joint ventures with local companies due to legislation.
Local automotive suppliers’ products are mainly in the low-end markets.
Geographical concentration of automotive suppliersChinese automotive suppliers
19
MANY OF THE LARGE T1 SUPPLIERS ARE LOCATED IN EAST CHINA- All major international players are present in China.
Source: China Automotive Association
Cables, bus systems, embedded systems
Bosch Valeo Siemens VDO DENSO Corporation Delphi
Power train, exhaust systems, engines
Bosch FAWER* Dongfeng
Cockpit, seats, dash-board, air conditioning
Visteon Valeo Delphi
TIER 1 SUPPLIERS
Electrical systems Interior equipment Propulsion Body Running gear
Body, roof, glass, doors, lighting etc.
FAWER* Visteon FAWER*-sihuan
Suspension, brakes, axles, steering, tires
Bosch Wanxiang FAWER*
* FAWER is an affiliated corporation of FAW
20
TIER 1 SUPPLIERS
Danso, Tianjing, ChinaAir conditioner2,000Danso
HQ, Hangzhou, ChinaAutomotive components30,000Wanxiang
HQ, Changchun, ChinaAutomotive components2,456Fawer-sihuan
HQ, Guangzhou, ChinaAutomotive Componets1,700Dongfeng
Automotive components
Interior Equipment
Air conditioner
Electric System
Electric System
Air conditioner
Electric System
Automotive components
Business
HQ, Changchun, China15,000Fawer
HQ, Shanghai, China300Visteon
HQ, Shanghai, China
HQ, Shanghai, China
920
600
Delphi
HQ, Shanghai, China300Siemens VDO
Purchase office, Shanghai, China
Purchase office, Shanghai, China
4,000Valeo
HQ, Shanghai, China15,000Bosch
LocationEmployeesManufacturer
21
THE T1 SUPPLIERS ARE LOCATED NEAR THE VEHICLE OEMs- All major international players are present in China.
Faw-sihuan
Fawer Changchun Automotive Components
Bosch Wuxi Automotive Diesel System
Bosch Suzhou Automotive Components
Bosch Shanghai Automotive Electric
Valeo Shanghai Automotive Electric
Denso Tianjing
Shanghai Delphi Auto A/C Systems
Delphi Shanghai Electric Systems
Yianfeng Visteon Automotive Systems
Shanghai Yanfeng Johnson Seats
Wanxiang Group
Valeo Hubei Automotive Air-conditioner
Dongfeng Automotive ComponentsDongfeng EnginesSiements VDO Automotive
22
THERE ARE MANY T2 SUPPLIERS LOCATED IN CHINA- T2 Suppliers are mainly Chinese companies.
Automotive Association, Magazine Automobil Produktion
Cables, bus systems, embedded systems
Weifu Group Guangdong Ruitu Changxiang
Power train, exhaust systems, engines
Great Wall Zhongding Group Hangzhou Auto
Engines
Cockpit, seats, dash-board, air conditioning
Weifu Group Torch Automotive Tianjing Huafeng
TIER 2 SUPPLIERS
Electrical systems Interior equipment Propulsion Body Running gear
Body, roof, glass, doors, lighting etc.
Weifu Group Dongfeng Auto Parts
Suspension, brakes, axles, steering, tires
Torch Automotive Dongfeng Wanxiang Group Jinfei Group 3000
23
TIER 2 SUPPLIERS (1/2)
HQ, Anhui, ChinaAutomotive Components
200Zhongding
HQ, Hangzhou, ChinaAutomotive Components
128Hangzhou Auto Engines
Electric System
Automotive Components
Automotive Components
Automotive Components
Automotive Components
Automotive Components
Business
HQ, Shanghai, China600Changxiang
HQ, Tianjing, China200Tianjing Huafeng
HQ, Guangzhou, China300Dongfeng Hubei Components
HQ, Wuxi, China300Wuxi Weifu
HQ, Baoding, China700Great Wall
HQ, Jinhua, China3,000Jinfei Group
LocationEmployeesManufacturer
24
TIER 2 SUPPLIERS (2/2)
HQ, Quanzhou, ChinaAutomotive Components
200Torch Automotive
Engines
Automotive Components
Business
HQ, Baoding, China200Great Wall
HQ, Guangzhou, China300Auto Parts
LocationEmployeesManufacturer
25
THE T2 SUPPLIERS ARE LOCATED NEAR THE VEHICLE OEMS - T2 Suppliers are mainly Chinese companies.
Great Wall
Wuxi Weifu Group
Tianjing Huafeng
Jinfei Group
Changxiang
Hangzhou Auto Engines
Dongfeng Hubei Components
Zhongding Group
Torch Automotive
Auto Parts
Guangdong Ritu
26Source: STC
Almost all large international suppliers (according to the turnovers) are presented in China.
Local protection still exists.
R&D-displacement
Competition and price
reductions
Globalization
Foreign players are at medium-high end market. Locals are taking main share, but at low end market
Local suppliers are spending efforts on updating their products. International suppliers start to have R&D centers in China
INTERNATIONAL SUPPLIERS MOVE R&D CENTERS TO CHINA- local suppliers still have the largest market share
Trends within the Chinese Automotive supplier industry
27
Overview Chinese Manufacturing Industry
Chinese Automotive Industry
Chinese Construction Equipment Industry
Manufacturers
Suppliers
Recommendations
References
CONTENT
28
THE CHINESE PRODUCTION OF CONSTRUCTION EQUIPMENT TOTALS ABOUT SEK 123 BILLION- the industry grew more than 8 % 2005
0
50
100
150
200
250
2000 2001 2002 2003 2004 2005
Domestic Export
Lifting
SEK 19.2 billion
Earth Moving
SEK 45.6 billion
Road
SEK 31.6 billion
billion SEK Sales construction machinery in China
Source: China Machinery Magazine
Underground&Others
SEK 28.6 billion
Growth is mainly driven by domestic sales
29
MORE THAN 266,000 CONSTRUCTION EQUIPMENTS ARE PRODUCED IN CHINA
SOME TOP CONSTRUCTION EQUIPMENT MANUFACTURERS
ROAD(45,323 vehicles)
5 manufacturers. Guangxi Liugong
Machinery Co., Ltd
Xuzhou Construction Machinery Group.Inc
Shenyang North Traffic Engineering Company
China Infrastructure Machinery Holdings Limited
Xiamen Engineering Machinery Co., Ltd
Graders,Concrete Mixer, Asphalt Paver, Road Roller
UNDERGROUND(4,989 vehicles)
4 manufacturers Shenyang Heavy
Machinery Group Co.,Ltd
Inner Mongolia North Heavy Industries Group
Changlin Company Ltd.
Shanghai Engineering Machinery Co.,Ltd
Wheel loaders, Drills, Haulers, Pile Hammer
5 manufacturers Xuzhou
Construction Machinery Group.Inc
Guangxi Liugong Machinery Co., Ltd
Xiamen Engineering Machinery Co., Ltd
Changlin Company Ltd.
China Infrastructure Machinery Holdings Limited
EARTH MOVING(136,664 vehicles)
Excavators, WheelLoaders, Backhoe loaders, Skid steer loaders, Bulldozer
LIFTING(79,262 vehicles)
4 manufacturers Xuzhou
Construction Machinery Group.Inc
Shenyang North Traffic Engineering Company
Guangxi Liugong Machinery Co., Ltd
Changlin Company Ltd.
Mobile cranes, Tower Crane, Forklifts, Truck-mounted Crane
Source: National Development & Reform Commission, Construction Machinery Magazine, China Construction Machinery Association
30
THE CONSTRUCTION EQUIPMENT INDUSTRY IS CONCENTRATED TO THE COASTAL AREA OF CHINA
HQ,Xiameng, Fujiang, Province
HQ, Changzhou, JIangsu Province
HQ, Shanghai
HQ, Liuzhou, Guangxi Province
HQ, Xuzhou, Jiangsu Province
Purchase Decision
1893
1496
5150
7,500
20,000
Employee
Total: 17050Wheel loaderRoad roller
Shanghai;Longyan, Fujian province
China Infrastructure Machinery Holdings Limited
Total:10,000Wheel loaderRoad RollerGraderBackhoe loaderCraneConcrete paver
Changzhou, Jiuangsu Province
Changlin Company Ltd.
LoaderRollerBulldozerExcavatorConcrete pump
Wheel loadersSkid steer loadersBackhoe loadersExcavator RollersMotor GradersPaving Equipment
Wheel loadersTruck cranesMotor gradersRoad rollersRoad paversBulldozers
Models and focus
Total: 14,540Xiamen,Fujian Province
Xiamen Engineering Machinery Co., Ltd
Total: 20,000Liuzhou,Guangxi Province
Guangxi Liugong Machinery Co., Ltd
10,00010,000
3,0008,0001,000
500
Xuzhou, Jiangsu Province
Xuzhou Construction Machinery Group.Inc
Production volume
PlantManufacturer
The 6 largest OEM construction equipment manufacturers in China
Source: Corporate websites and annual reports
31
MAIN CONSTRUCTION MANUFACTURERS CONCENTRATED IN THE SOUTHEAST COAST OF CHINA
Xuzhou Construction Machinery Group.Inc
China Infrastructure Machinery Holdings Limited
Changlin Company Ltd.
Xiamen Engineering Machinery Co., Ltd
Guangxi Liugong Machinery Co., Ltd
32
Overview Chinese Manufacturing Industry
Chinese Automotive Industry
Chinese Construction Equipment Industry
Manufacturers
Suppliers
Recommendations
References
CONTENT
33
SUPPLIERS OF CONSTRUCTION EQUIPMENT ARE MAINLY LOCATED CLOSE TO ENGINEERING MACHINERY MANUFACTURERS
Source: Parts and Components Branch of China Construction Machinery Association
Cables, bus systems, embedded systems
Shanxi Sunland Automatic Control
Xi’an Kind Electrical Control Instruments
Shanghai Pal-fin Automatic Control Technology
Power train, exhaust systems, engines
Cummins Hangzhou Advance
Gearbox Qidong Sanshang
Electromechanical Sichuan Gear Works Torque Converter
Shantui Construction Machinery
Zhejiang Linhai Machinery
Hubei Guanghua Transmission
Cockpit, seats, dash-board, air conditioning etc.
Zhejiang Tiancheng Seat
Shandong CAB Fenghua Hearty
Motormeters Yuxin Automotive Air
Conditioning Hangzhou Nealley
Vehicle Air Conditioning
SUPPLIERS
Electrical systems Interior equipment Propulsion Body Running gear
Body, roof, glass, doors, lighting etc.
XuZhou YangSheng Machine
Taixing Huaheng Lamp & Plastic
Suspension, brakes, axles, steering, tires
Wanxiang Group Xuzhou Zhengxing
Axle Wuxi Shengfeng
Vibration Isolator AsiaTrak Wendeng Sanfeng Tire Hangzhou Zhenxing
Friction Material Liaoan Section Mill Shandong Shantui
Ouyatuo Machinery Baoding Jizhong
Bushing Factory Tianjin Ribiao
34
HQ, Zhejiang, ChinaSeatN/aZhejiang Tiancheng Seat
HQ, Shanghai, ChinaControl systemN/aShanghai Pal-fin Automatic Control Technology
HQ, Chongqing, ChinaEngineN/aCummins
HQ, Zhejiang, ChinaAutomotive Air Conditioning
N/aHangzhou Nealley Vehicle Air Conditioning
HQ, Zhejiang, ChinaTransfercase3,350Hangzhou Advance Gearbox
HQ, Henan, ChinaAutomotive Air Conditioning
N/aYuxin Automotive Air Conditioning
Motormeters
Cockpit
Control system
Control system
Business
HQ, Zhejiang, China100Fenghua Hearty Motormeters
HQ, Shandong, China200Shandong CAB
HQ, Shanxi, ChinaN/aXi’an Kind Electrical Control Instruments
HQ, Shanxi, ChinaN/aShanxi Sunland Automatic Control
Purchase decisionsEmployees
Manufacturer
SUPPLIERS TO THE CONSTRUCTION EQUIPMENT INDUSTRY (1/3)- All purchase decisions are made locally
Source: Company website
35
HQ, Jiangsu, ChinaDoorN/aXuZhou YangSheng Machine
HQ, Jiangsu, ChinaLights and accessories
550Taixing Huaheng Lamp & Plastic
HQ, Shandong, ChinaTireN/aWendeng Sanfeng Tire
HQ, Tianjin, ChinaRollersN/aAsiaTrak
HQ, Jiangsu, ChinaVibration Isolator
425Wuxi Shengfeng Vibration Isolator
Drive Axle
Suspension, steering
Transfercase
Electric Motor
Business
HQ, Jiangsu, ChinaN/aXuzhou Zhengxing Axle
HQ, Zhejiang, ChinaN/aWanxiang Group
HQ, Sichuan, China2200Sichuan Gear Works
HQ, Jiangsu, China300Qidong Sanshang Electromechanical
Purchase decisionsEmployees
Manufacturer
SUPPLIERS TO THE CONSTRUCTION EQUIPMENT INDUSTRY (2/3)
Source: Company website
36Source: Company website
SUPPLIERS TO THE CONSTRUCTION EQUIPMENT INDUSTRY (3/3)
HQ, Tianjin, ChinaReducer and parts assembly
N/aTianjin Ribiao Construction Machinery Parts
HQ, Shandong, ChinaTorque Converter
582Torque Converter Shantui Construction Machinery
HQ, Zhejiang, ChinaTorque converter
550Zhejiang Linhai Machinery
HQ, Zhejiang, ChinaFrictional products
Around 200Hangzhou Zhenxing Friction Material
Transmission Box Shell
Idler, Roller, Carrier
Axletree & Tile
Track shoes
Business
HQ, Hubei, ChinaAround 150Hubei Guanghua Transmission
HQ, Shandong, ChinaN/aShandong Shantui Ouyatuo Machinery
HQ, Hebei, ChinaN/aBaoding Jizhong Bushing Factory
HQ, Liaoning, ChinaAround 100Liaoan Section Mill
Purchase decisionsEmployees
Manufacturer
37
THE CONSTRUCTION EQUIPMENT INDUSTRY IS CONCENTRATED TO THE COASTAL AREA OF CHINA
Source: Corporate websites and annual reports
Shanxi Sunland Automatic Control
Xi’an Kind Electrical Control Instruments
Shanghai Pal-fin Automatic Control Technology
Zhejiang Tiancheng Seat
Shandong CAB
Fenghua Hearty Motormeters
Yuxin Automotive Air Conditioning
Hangzhou Nealley Vehicle Air Conditioning
Cummins
Hangzhou Advance Gearbox
Qidong Sanshang Electromechanical
Sichuan Gear Works
Torque Converter Shantui Construction Machinery
Zhejiang Linhai Machinery
Hubei Guanghua Transmission
XuZhou YangSheng Machine
Taixing Huaheng Lamp & Plastic
Wanxiang Group
Xuzhou Zhengxing Axle
Wuxi Shengfeng Vibration Isolator
AsiaTrak
Wendeng Sanfeng Tire
Hangzhou Zhenxing Friction Material
Liaoan Section Mill
Shandong Shantui Ouyatuo Machinery
Baoding Jizhong Bushing Factory
Tianjin Ribiao
38Source: STC
Market restructuring happens with the supervision from the government Sanyi and Carlyle Group are under the negotiation with Xu Gong acquisition
Technology
Competition
Restructuring
Foreign, esp. Japanese and American players are at medium-high end market, with low volume
Locals are taking main share, but at low end market
Locals are taking efforts to develop premium products IPR is still a concern to many foreign investors
THE MARKET IS BEING RESTRUCTURED UNDER SUPERVISION FROM THE GOVERNMENT
Trends within the Chinese Construction Equipment industry
39
Overview German Manufacturing Industry
German Automotive Industry
German Construction Equipment Industry
Recommendations
References
CONTENT
40Source: STC
RECOMMENDATIONS FOR MAKING BUSINESS WITH THE CHINESE AUTOMOTIVE INDUSTRY
Recommendations for making business with the Chinese automotive industry
Although China has low labor costs, operation costs could be high why investors are recommended to make careful plan before they enter China
3.
2.
1.
Country specific
3.
2.
China´s automotive sector is not fully open yet, and many market restrictions still exist. IPR issue is still worth considering
It is necessary to carry out certain market study to understand the market and customers
To visit the potential customers or partners can be a good start for the business
China encourages investors to source locally, and set quite high duty on importing parts.
1.
Industry specific
It is necessary to carry out certain market study to understand the market and customers
To visit the potential customers or partners can be a good start for the business
China encourages investors to source locally, and sets quite high duty on importing parts.
Investors are recommended to build long term relationship with its partner and relevant authorities
41
Overview German Manufacturing Industry
German Automotive Industry
German Construction Equipment Industry
Recommendations
References
CONTENT
42
HOW STC IN CHINA SUPPORT COMPANIES TO DO BUSINESS IN CHINA
Partner search
SalesSupport
Market Check
Recruitments
Supplier search
BusinessSupport Office
Company establishment
Description of service Example of result Sample clients / Products
Besides this we often custom made projects to suit our customers needs
Map out the current situation in China for a specific product or service
Give the company a base for deciding if to enter the market or not / making a cost estimate for setting up production
• Plastic production company
• Household appliance manufacturer
Making test sales in China of a product and collecting feedback from potential customers to sharpen local offering
Modifying the product portfolio and sales pitch to better suit the Chinese market.
• Producer of alloys
• Springs for the automotive industry
Finding the most suitable agents or a distributors in China or Hong Kong based on the needs of the Swedish company
Making the Swedish and Chinese understand each other and finding common ground
• Leather for interior design
• Dental products
Map out the needs of the company, work out a profile and find the best possible candidate to that profile
140 recruitments over the last two years (Examples: Swedish GMs, Asia managers, local sourcing, local sales, QCs)
• Logistics
• Plastic manufacturing
Find the best possible supplier that matches the criteria set by the Swedish company to get the best competitive advantage
Matching, explaining and verifying technical needs with local production capacity
• Cast iron products, cables, containers, disposables, electronics
A quick “low risk” establishment in China either in the form of a full time staff or as part time support together with office space
Over 50 staff employed in China and Hong Kong that works 100% for the Swedish company but that is employed by STC
• Purchasing staff, sales staff, quality control staff, Swedish staff
Establishments and setting up of production- or trading companies in China and / or Hong Kong
Assist in establishing all types of presences; representative offices, WFOEs, FICE and Ltds (HK)
• Lighting products
• Aluminum manufacturing
43
STC HAS HELPED NUMEROUS SWEDISH COMPANIES TO DO BUSINESS WITH THE CHINESE AUTOMOTIVE INDUSTRY
Manufacturer of brake systems, hydraulic power systems, garphyttan wire (specialty spring wire), and traction systems
Service provider in both holistic commitments in complex vehicle development projects and consultancy services and expert support in pre-studies, design, calculation, construction, prototypes and test & verification.
Equipment provider for exhaust extraction systems for vehicle service shops and the automotive industry.
Visited relevant official department and manufacturers in Hong Kong, Guangzhou and Shanghai
A automotive delegation consist of 9 Swedish companies
PROFILECOMPANY
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STC CARRIED OUT A POTENTIAL CUSTOMER SEARCH AND VISITING PROGRAM FOR SEMCON
The overall objective of this assignment was to assist Semcon in investigating the market potential in Eastern China in and to further strengthen Semcon’s market position in Asia.
• Conducted a pre-study of potential customers, and set up a visiting program with a number of of RnD-managers at automotive manufacturers in Eastern China with STC.
• Assisted and advised Semcon in its meetings with potential partners during the visiting program
• STC also supported Semcon in the process of selecting customers.
STC role and contribution
Results
Goal Outline of project
• A recommended list of companies that met Semcon’s criteria was presented with company profile and STC’s comments and advices.
Potential customer
searchVisiting program
Kick off Workshop 1 Workshop 2
Kick off: The start-up meeting resulted in a skilled project team and detailed project planning.Step 1: STC carried out the potential customer search program.Workshop 1: Presentation and discussion of the potential customer search; deciding next step including planning of visiting program.Step2: Semcon visits China and meets with RnD-managers within the automotive industry together with STC.Workshop 2: Discussion of visiting program and next step.
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STC CARRIED OUT A RECRUITMENT AND BUSINESS SUPPORT OFFICE (BSO) PROJECT FOR NEDERMAN
The overall objective of this assignment was to assist Nederman to successfully enter the China market.
• STC supported Nederman to recruit two Sales Managers for the China market
• STC assisted Nederman to legally employ the staff under STC in East China (BSO concept) until Nederman decides to set up its own presence in China.
• By employing the representatives through STC BSO, Nederman will in reality have the same capabilities in China as if they would have it’s own Representative office.
STC role and contribution
Results
Goal Outline of project
• STC helped Nederman in establishing a presence in China and has now two sales managers working full time.
Advertisement Interviews Employment at
BSO
• Kick off: necessary candidate qualification discussion, choice of ad media, decided recruitment schedule.•Step 1: advertisement on newspaper went publications for candidate search.•Shortlist: review candidates’ profile to narrow down amount of candidates.•Step 2: interviews by Nederrman and STC with selected candidates.•Recruitment: qualified candidates employed.•Employment at BSO: with office space, office equipment and financial services provided by STC, employees start to work for Nederman.
Shortlist RecruitmentKick off