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In foreign countries, "Made in China" is often synonymous with "cheap goods." When some foreign companies import Chinese auto parts products, they often push the prices very low. In their view, as long as they are Chinese products, they are worth the price.
According to data released by the China Association of Automobile Manufacturers, China’s auto and auto parts exports were US$19.7 billion in 2005. Among them, 8.5 billion U.S. dollars were exported, an increase of 51% year-on-year.
Although the export of parts and components is showing a thriving scene, there are various problems behind the "gratifying people." Relevant persons pointed out that many companies have poor brand awareness and management, low technological content, and limited profit margins. Their situation is not optimistic.
Low-grade image to be changed
In recent years, the United States, Europe, and Japan have successively accused China of counterfeiting of export parts. China Chamber of Commerce for Import and Export of Machinery and Electronic Products also issued warnings. Following the textile, television, and semiconductor chips, China’s rising auto parts industry is facing trade barriers from the United States.
According to figures released by the U.S. Motor and Vehicle Manufacturers Association, the annual value of counterfeit auto parts in the world is US$ 12 billion, of which some are from China, India and South Korea.
This has caused some foreigners to make Made in China a low-level illusion. Guo Weidong, chairman of Jiangsu Yuantong Group Co., Ltd., told the “Financial Times†reporter: “It is very difficult to change this concept.â€
Yuantong Group is a private enterprise that entered the car wheel industry in 2000. From the very beginning of their establishment, they set the starting point for development as an overseas market, and currently have operations in Europe and the United States.
According to Guo Weidong, peer competition is a major problem faced by Chinese companies when they export. On the one hand, the prices of most Chinese exports are much lower than those of the normal market; on the other hand, low-priced and poor-quality products have affected foreigners' impressions of “Made in Chinaâ€.
Guo Weidong said that in this regard, they have to make great efforts to reverse the situation.
Exports must have a strategic vision
What kind of product is more suitable for the developed markets? This is a problem that many companies have come to realize but have not seriously considered.
Experts pointed out that as China's auto and auto parts products export is still in its infancy, many companies are blind to the foreign market. Regardless of whether it is an entire vehicle or a component, some enterprises always hold the attitude of “taking a shot and changing a place†and “taking a shot and going awayâ€. Chinese enterprises urgently need a strategic development vision.
“Our idea is to cultivate high-end markets with high-end products and start from difficult places.†Guo Weidong told the “Financial Timesâ€.
After the reporter entered the wheel industry, Jiangsu Yuantong Group made the European market the first step of its overseas strategy and soon established a branch in Germany. They use the aftermarket as a breakthrough point and use retail methods to allow more Germans to directly understand the quality of Chinese products.
Yuantong does not plan to earn any profit in the short term. "Despite the high profits of high-end products, Yuantong's strategy is to first do the market, and then profit." Guo Weidong said.
It is understood that, like Yuantong, there are not many Chinese companies wishing to enter high-end products into foreign markets.
“The risk is high, investment is large, and profit is slow, but the prospects will be good,†said the person concerned.
Optimize service and management
Many domestic companies believe that it is easy to support exporting for multinational corporations such as GM and Ford, as long as they meet the standards of others. However, relevant experts have warned that it is not a matter of good technology and good quality that can be exported. This involves many complicated issues.
It is reported that the supporting export of spare parts involves the problems of engineering, design, and technology matching, as well as the links of transportation and logistics. Among these factors, if a link goes wrong, it will fall short of success. Domestic enterprises have encountered great difficulties in exporting because of insufficient attention to transportation and logistics in some links.
A French spare parts company fancy the low price advantage of China's spare parts products, looking for a business cooperation, its French counterparts are advised to guard against the low quality problems brought by low prices. They also heard that Chinese companies are not doing well in management, and often have delays in delivery and an unbalanced number. Therefore, they are very cautious in this regard when negotiating with Chinese companies.
Yuantong Group seized this opportunity. Although Yuantong’s product prices were higher than other products from China, the French immediately decided to cooperate with Yuantong after seeing Yuantong’s products and inspecting its management and logistics system.
At the beginning of Yuantong’s entry into the automotive wheel industry, it had worked with a Taiwanese company. From there, Yuantong not only learned technology, but also learned Taiwan’s management methods. These have played a very positive influence on the development of Yuantong.
Friends should also know
Industry insiders believe that before opening up overseas markets, Chinese auto parts companies should have accurate analysis and understanding of target markets, and develop accurate market positioning and product strategies. At the same time, understanding the local environment, consumer culture, laws and regulations is also very important.
Yutong's automobile wheel products are mainly sold to Europe, but for the domestic and US markets, Yuantong is currently not planning to enter on a large scale. In China, Yuantong only cooperates with Changhe Motors, and the wheels of its new models all use Yuantong's products; in the United States, Yuantong is based on ATVs (all-terrain vehicles).
According to Guo Weidong, the operation of the domestic market is not standardized, and parts companies are overly dependent on OEMs. The profits will not be too high. Moreover, there are many large companies that produce wheels domestically and the competition is fierce. However, in the United States, the cost of vehicles, management, etc., and the European and Japanese companies have a wide gap, and the automotive industry has shown a downward trend in the United States. At this time, entering the US market is obviously unwise.
He believes that companies only see the macro market is not enough, overseas development should also understand the details of the operation of the other market.
In Yuantong's German branch, the local people account for the vast majority. Guo Weidong believes that Germans know what kind of products Germans like and can do many things that Chinese people can't do: First, selling products through local people will bring the distance between Germans and Chinese products closer. Second, Germans Experienced, and familiar with the local market; Third, they know the local culture, operating models, laws and regulations difficult to understand the Chinese people; In addition, they have a great advantage in product planning, marketing strategy.