China’s auto part export grows rapidly in Jan-Jul, restrictive elements of trade

Oct. 20, 2008          Source: www.customs.gov.cn

According to statistical data from the customs, the accumulative auto part export from China in this January to July amounts to USD 8.88 billion, with a year-on-year increase (same in the following) of 34.9%. In which, the export in July is USD 1.41 billion, with an increase of 30.9%. The main features of export are:

I.      With general trade export as the main, and the ratio has increased. From January to July this year, China has exported auto part of USD 6.93 billion, with an increase of 39%, accounting for 78.1% of total value of auto part export from China in the same period, with a year-on-year increase of 2.3%. In addition, the export in the form of processing trade is USD 1.8 billion, with an increase of 22.3%, accounting for 20.3%.

II.     The export of foreign-funded enterprise accounts for a half, and the export of private enterprises increased quickly. In January to July, the auto part export from foreign-funded enterprise is USD 4.56 billion, with an increase of 31.6%, accounting for 51.4% of total value of auto part in the same period in China; the export of private enterprise is USD 2.58 billion, with an increase of 29.1%; the export of state-owned enterprise is USD 1.42 billion, with an increase of 19%, and accounting for 16%.

III.   The main export markets are US, EU and Japan. In January-July this year, the auto part export to US, EU and Japan amounts respectively to USD 2.69 billion, USD 1.6 billion and USD 1 billion, with growth of respectively 8.8%, 39.2% and 36.8%. The total export value to these three market accounts for 59.6% of total value of auto part export in China. In addition, the exports to ASEAN and South Korea are respectively USD 550 million and USD 420 million, with big growth of respectively 65.9% and 53.9%.

IV.    Yangtze Delta area is the main export area. In January-July this year, Zhejiang, Jiangsu and Shanghai have exported auto part valuing USD 1.7 billion, USD 1.39 billion and USD 1.2 billion, with increases of respectively 36.8%, 37.7% and 15.1%, the total export of the above 3 cities and provinces accounts for 48.2% of total auto part export in China in the same period. In addition, Shandon and Guangdong have respectively exported USD 920 million and USD 890 million, with growth of 33.8% and 50.1%.

As supported by national industrial policy and sustained growth of assembled car export, in recently years, China’s auto part export has realized rapid growth, however, the development of the trade and export at present still face the following disadvantageous elements:

Firstly, foreign trade barrier restricts the export. The auto part export in China composes low and medium product, for a long period, they have entered international market by virtue of price, and will easily suffer anti-dumping investigation in foreign countries. Since 2006, many countries of US, Canada and Russia have conducted anti-dumping investigation on the transmission shaft, and braking disc exported from China. While European countries carry out trade protection via EMAEK certification, CE certificate, market entering order, and other statute, which bring considerable barrier to the export of domestic enterprise in terms of technology and cost.

Secondly, the advantage of low cost is gradually weakening. At present, Renminbi appreciation, raw material price increase, and the increase of labor fore and logistic cost have caused large shock to the auto part production in China. Meanwhile, China’s status as low-cost part manufacturer is facing challenge from other Asian countries, especially India, the auto supporting industry is attracting main auto producer in the globe by means of sufficient raw material, especially high quality steel, and the more competitive labor cost than China.

Thirdly, the “sole investment tendency” makes local enterprise stay at the edge. Before WTO accession, international auto part enterprise established production base in China in the form of joint venture; while after WTO accession, foreign enterprise tends to build factory with sole investment, and the foreign party of joint venture has purchase stock right to seek for sole investment or absolute control. The “sole investment tendency” of foreign party makes the technology, management and capital exchange with market in China more and more difficult; the lack of core technology makes the local manufacturer at the edge.

Fourthly, the technology has large gap, and the research input is not sufficient. At present, the domestic auto part enterprise has enlarging gap with foreign enterprise in system integration, information technology application and structural design. The insufficient R&D and poor independent innovation ability have become a major problem faced by Chinese auto part enterprise. According to general statistics of relevant foreign enterprise, the average investment of auto part industry shall be 1.2-1.5 times of can assembler, while China’s present condition is lower than 0.3, obviously than the average international level; meanwhile, most Chinese auto part enterprises don’t have product development ability, the product development mainly depends on the main machine factory, and can hardly meet the requirement of assembled car upgrading.

Therefore, we suggest encouraging auto part producers to merge and regroup according to their features, reinforce independent innovation ability, improve product technological content, forge independent brand, and quicken product structure adjustment; meanwhile, establish export precaution mechanism, lower the influence from trade barrier, and constantly reinforce the international competitiveness of product.