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Xingbin LI Chief Representative AMT-Beijing Representative Office China Market Update. Market Update Breakfast – China September 8, 2006. CONTENTS. The China automotive industry Production & growth rate Opportunity

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Xingbin LI

Chief Representative

AMT-Beijing Representative Office

China Market Update

Market Update Breakfast – China September 8, 2006


Contents
CONTENTS

  • The China automotive industry

    • Production & growth rate

    • Opportunity

      • Production capacity (current production, production capacity and expansion plan)

      • Key automakers

  • The China components industry

    • Production & growth rate

    • Opportunity

      • Demands (purchasing plans of major global automakers)

      • New measures and tariff (technical barrier)

      • Key suppliers (global suppliers and domestic suppliers)


Facts
Facts

  • 4th Largest economy in the world in 2005

    • GDP: USD 2.263825 trillion

    • GDP growth rate: 9.9%

  • 2nd Largest auto market in the world in 2005

    • Production: 5.75 million units of vehicle

    • Growth rate: 13.4%

  • The largest machine tool market in the world

    • USD10.9 billion

    • Growth rate: 15%


The china automotive industry production growth rate
The China Automotive IndustryProduction & growth rate


117 Registered Automakers,

Of which 90 company’s capacities

Are less than 10,000 units a year.

The China Automotive Industry Production & growth rate

Vehicles

(Million of Units)

200220032004 2005 2006

(1 – 6)

Production 3.25 4.44 5.07 5.75 3.63

Changes, % 38.8 36.6 14.2 13.4 28.9

Source: China Auto Industry Year Book


The china automotive industry production growth rate1
The China Automotive IndustryProduction & growth rate

China Car Productions

(Million of Units)

2001 2002 2003 2004 2005 2006e (1-6)

Production 0.7 1.09 2.06 2.26 2.95 1.80

Change % 15.1 55.7 89.0 9.7 30.5 46.9


Production of Top 8 Chinese automakers

from January-June, 2006 (in units)

  • Shanghai Automotive Industry Corp 621,400 54.85%

  •  First Automotive Works Corp 562,900 23.28%

  •  Dongfeng Motor Corp 454,200 26.1%

  •  Chang'an Motor Corp 369,100 8.39%

  •  Beijing Automotive Industry Corp 337,100 11.94%

  •  Chery Automobile 144,200 72.15%

  •  Geely Automobile 105,900 55.62%

  •  Guangzhou Automobile 105,700

    (Source: China Association of Automobile Manufacturers)


The china automotive industry opportunity production capacity
The China Automotive IndustryOpportunity – Production capacity

  • Production in 2005: 5.75 million units

  • Production capacity in 2005: 8 million units

  • Production capacity expansion plan: 16 million units by 2010


The china automotive industry opportunity key automakers
The China Automotive IndustryOpportunity - Key automakers


“A Fragmented Industry”

1,540 Registered Enterprises

3,500-8,500 Non-Registered

The China Components IndustrySales & growth rate

Components Statistics

($ billion)

200220032004 2005

Total Sales 34.2 47.9 62.7 71.9

Domestic 32.3 42.1 52.1 56.1

Imports 3.4 9.3 11.3 10.4

Exports 1.9 5.8 10.6 15.8

Average Annual Sales Per Supplier:

$5.0 to $10.0 million

Source: China Auto Industry Year Book


The china components industry opportunity demands
The China Components IndustryOpportunity- Demands

  • Daimler-Chrysler (for China operation)

    • To spend $840 million in buying parts in 2008 ($100 million in 2005)

  • BMW (for China operation)

    • To spend $300 million in buying parts in 2007

  • Volkswagen (for overseas operations)

    • To spend $1.0 billion in buying parts in 2006 ($300 million in 2005)

  • Volkswagen (for China operations)

    • To spend $2.5 billion in buying parts in 2006

  • Multinational firms totally (for overseas operations)

    • To spend $35 billion in buying parts by the end of 2007


The china components industry opportunity new tariff
The China Components IndustryOpportunity– New tariff

Cars

Displacement2001 2002 2003 2004 2005 2006

<3.0 L 70 43.85 38.2 34.2 30.28 25

>3.0 L 80 50.7 43 37.6 30.3 28.25

Parts & Components

2001 2002 2003 2004 2005 200610


The china components industry opportunity new measures
The China Components IndustryOpportunity– New measures

  • “Measures for the Administration of Import of Automobile Components and Parts Featuring Complete Vehicles”

    • Promulgated by the Customs of China, MOC, MOF and NDRC on April 1, 2005

    • Go into effect on July 1, 2006


The china components industry opportunity new measures key points
The China Components IndustryOpportunity– New measures – Key Points

  • Article 21 - Under any of the following circumstances, the imported automobile components and parts shall be considered bearing the features of a complete vehicle:

    • Importing CKD or SKD to assemble automobiles.

    • The total price of the imported components and parts is not less than 60% of the total price of the complete vehicle type.

    • If, within the scope as prescribed in Article 4 of the present Measures:

      • Importing both the vehicle body (including the cab) assembly and engine assembly to assemble vehicles;

      • Importing either the vehicle body (including the cab) assembly or engine assembly and 3 or more other assemblies (systems) to assemble vehicles;

      • Importing 5 or more assemblies (systems) other than the vehicle body (including the cab) assembly and the engine assembly to assemble vehicles.


The china components industry opportunity new measures key points1
The China Components IndustryOpportunity– New measures-Key points

  • Article 22 - under any of the following circumstances, the imported automobile components and parts shall be considered bearing the features of an automobile assembly (system)

    • Importing whole sets of KD components and parts to assemble an assembly (system)

    • Importing key components and parts or sub-assemblies to assemble an assembly (system), and the import of key components and parts or sub-assemblies reaches or exceeds the specified quantity.

    • The total price of the imported components and parts is not less than 60% of the total price of the assembly (system)


The china components industry opportunity new measures1
The China Components IndustryOpportunity– New measures

“Measures” REALLY means that

  • Discouraging automakers from using imported car parts for vehicles they assemble in China and making car by CKD & SKD increases production cost (from 10% to 25%)

  • Creating an incentive for car parts makers to shift production to China


The china components industry opportunity changes for global suppliers
The China Components IndustryOpportunity – changes for global suppliers

  • From shareholding to share controlling

  • From JV to WOFE

  • From market penetration to market monopoly


Where are the major component suppliers located in china

MAP OF CHINA

Where are the Major Component Suppliers Located in China?

Northeast

(Jilin, Liaoning)

Greater Beijing area

(Beijing, Tianjin)

Yangtze river delta

(Shanghai, Jiangsu, Zhejiang)

Middle China

(Hubei)

Southwest

(Chongqing, Chengdu)

Pearl river delta

(Guangdong, Fujian)


The china components industry opportunity key suppliers

Major global suppliers

ASIMCO

Eaton

Delphi

Dana

TRW

Visteon

Lear

BorgWarner

Johnson Controls

Bosch

Siemens VDO

ThyssenKrupp

GKN

Freudenberg

Faurecia

Valeo

Aisin Seiki

Yazaki

Denso

ArvinMeritor

Autoliv

Magna

Major domestic suppliers

FAW Fawer Auto Parts Co.

Dongfeng Motor Co., Ltd Parts & Components Business

Wanxiang Group

Sanhua Holding Group

Wanfeng Auto Holding Group

The China Components IndustryOpportunity– key suppliers


Global suppliers in china
Global Suppliers in China

ASIMCOParkview Center, 4/F, 2 Jiangtai Road (s), Chaoyang District 100016, P. R. China

(86)10-6438-2750, www.asimco.com

  • Asimco Meilian Braking System (Langfang) Co. Langfang, Hebei Province Air-compressor, brake

  • Asimco International Costing Co. Jiang County, Shanxi Province Casting for engine block and head

  • Beijing Asimco Tianwei Fuel Injection Pump & Nozzle Co. Beijing Fuel injection pump, oil nozzle

  • Zhong Ding Automotive Components Co Ningguo, Anhui Province Rubber products

  • Nanyue Fuel Injection & Pump Co. Hengyang, Hunan Province Fuel injection pump

  • Sichuan Dan Chi Industry Co. Sichuan Province Transmissions

  • Hubei Super-Elec. Auto Components Co. Shashi, Hubei Province Generators, starters

  • Harbin Feibeng Auto-Elec. Co. Harbin, Heilongjiang Province Igniters, ignition coils, relays, switches

  • Asimco Braking System (Zhuhai) Co. Zhuhai, Guangdong Province Disc & Drum type brakes, vacuum boosters

  • Asimco Braking Braking System (Guangzhou) Co. Guangzhou, Guangdong Province Disc & Drum type brakes, boosters

  • Asimco Shuangtai Components (Sichuan) Co. Sichuan Province Wheels

    EatonFloor, 300 Huai Hai Zhong Road, Hong Kong New World Tower, Shanghai 200021, P. R. China  

    (86)21- 6278-5090, www.eaton.com

  • Eaton Electrical (Suzhou) Co., Ltd. - EES Suzhou, Jiangsu Province Electrical circuit protection devices

  • Eaton Fast Gear (Xi'an) Co., Ltd. Xi’an, Shaanxi Province Transmissions

  • Eaton Fluid Power (Jining) Co., Ltd. Jining, Shandong Province Hydraulic pumps and motors

  • Eaton Fluid Power (Shanghai) Co., Ltd Shanghai Fluid connectors

  • Eaton Senstar Automotive Fluid Connector (Shanghai) Co. Shanghai Fluid connectors

  • Eaton Truck and Bus Components (Shanghai) Co., Ltd Shanghai Transmissions

  • Hangzhou Switches Power Systems Co., Ltd. Hangzhou, Zhejing Province Switches

  • Shanghai Eaton Engine Components Company, Ltd. Shanghai Engine valves and hydraulic tappets

  • Zhenjiang Eaton Electrical Systems Co., Ltd. Zhejiang Electrical devices

  • FAW Eaton Gear-Box Co. Changchun, Jilin Province Transmissions

  • Guangzhou Eaton Piston Ring Co. Guangzhou, Guangdong Province Piston rings

  • Ningbo Eaton Shenglong Co. Jingbo, Zhejiang Province Hydraulic hose fittings and adapters


Domestic suppliers in china
Domestic Suppliers in China

FAW Fawer245 Shenzhen Street, Economic Development Zone, Changchun, Jilin, P. R. China

(86)0431-4659800, www.fawer.com.cn

  • There are 23 manufacturing divisions/ companies under FAW Fawer Group.

    Dongfeng Motor Co., Ltd Parts & Components Business

    8 dong Bin Gu Tai, Dong Cheng Road, Shiyan 442000, Hubei, P. R. China

    (86)0719-8221934, www.dfap.com.cn

  • There are 17 manufacturing/companies under Dongfeng Motor Co. Ltd Parts & Components Business.

    Wanxiang GroupWanxiang Road, Xiao Shan District, Hangzhou, Zhejiang, P. R. China

    (86)571-82832999, www.wanxiang.com.cn

  • There are 8 manufacturing/companies under Wanxiang Group making auto parts and components.

    Sanhua Holding GroupXinchang, Zhejing, P. R. China

    (86)575-6222768, www.sanhuagroup.com

  • There are 7 companies under Sanhua holding group making auto parts.


New service how amt china helps you
New Service – How AMT China Helps you

China Market Penetration Strategy Development Session

Designed to help those AMT members who are new to China and want to develop their company’s sales & marketing strategy for today’s China


New service how amt china helps you1
New Service – How AMT China Helps you

Review Session for your Existing China Market Penetration Strategy

Designed to help YOU validate and invigorate your existing Sales & Marketing Strategy for today’s China



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