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According to Dong Yu, chairman of Shanxi Yixin Brake Components Co., Ltd., the auto parts industry is like a “siegeâ€. People outside the industry want to come in. People in the industry are complaining.
Dong Yu has always been looking forward to supporting more vehicle manufacturers to reduce his dependence on an entire vehicle company. He not only has to worry about the company's technology, management, and product quality, but also has to care about and analyze industry trends. Only in this way can the company not be eliminated by the market.
One of the most embarrassing of him is dealing with vehicle manufacturers.
In the case of rising raw material prices and a drop in vehicle prices, smaller parts and components companies generally feel more and more difficult. They very much hope that the entire vehicle company can reach out and pull oneself at this critical moment, but they also clearly know that this is a luxury.
Difficult to support
Shanxi Yixin is an asbestos-free automotive brake professional enterprise that has developed similar products and has more models in China. Dong Yu has made painstaking efforts to enable companies to enter the supporting system of the vehicle factory.
Since the 90s of the last century, the liberation of light trucks has become very popular. Due to the problem of brake components, vehicle manufacturers organize technical problems. Dong Yu spotted the opportunity to organize the personnel to develop non-asbestos disc and drum brakes with better braking performance. However, excellent product quality is only a prerequisite, and many manufacturers can produce similar products. The final choice of who is supporting is a matter for the vehicle manufacturer.
After numerous inspections, the company made a series of public relations work in the early and late stages of R&D, and the new products were eventually adopted. In Dong Yu’s heart, a stone has finally landed. This success has not only made Yizen invest a lot of R&D expenses, but more importantly, it can bring huge profits to the company by liberating such best-selling models.
Dong Yu is fortunate. When dealing with the OEM, he saw with his own eyes that more companies are being rejected outside the door of the automaker.
Relevant persons pointed out that until today, the relationship between China's parts factories and host plants is still the mainstream, and most parts and components companies rely on the "alms" of the main plant to live. This is in stark contrast to the symbiotic and win-win situation between auto OEMs and parts factories in developed countries.
According to analysis, the risk of R&D in Chinese automotive products is mostly borne by the supplier alone. This has led many small and medium-sized enterprises to not invest too much money in R&D, which has directly led to the convergence of parts and components and low technological content.
Hard to return money
Mr. Chen is a retired employee of a domestic large-scale automobile group. Currently, he is busy answering his old club.
Originally, Mr. Chen was employed by a parts and components factory after retirement and became a representative of the plant's resident car group. His job was to help the company to urge the original vehicle manufacturer to pay the purchase price.
Many of Chen’s former colleagues are now doing the same job. On the one hand, they rely on their own professional skills, and more importantly, they maintain a good relationship with the relevant leaders of the main engine plant. They have unique advantages in product matching and payment.
The “Financial Times†reporter learned from a person who once worked in the FAW Collaboration Office that the vehicle manufacturer’s pressure is sometimes more than one year, and the efforts of the “debt†staff can generally be several months in advance. Get back the money. If the supplier can get the payment within 3 months, it is not considered a pressure.
According to reports, the automakers delayed the payment because they did not implement the “cash on delivery†principle, but when components were used for loading and when the payment was made, the stock pressure was basically transferred to the parts factory.
Dongfeng Motor Pump Co., Ltd. is a subsidiary of Dongfeng Motor Co., Ltd.'s Parts and Components Division. Sixty to seventy percent of the company's products are sold to Dongfeng Motor. Minister Liu of its marketing department said that Dongfeng’s part of the purchase price is easy to recover, while external accounts are hard to say. If a company's payment recovery is difficult, they can only give up cooperation with the factory.
Not long ago, a customer went to Minister Liu's "blacklist." The reason is that this customer cannot guarantee the quantity of demand, nor can it make timely payment.
"That is a bottomless pit that will always fill up dissatisfaction." Minister Liu told the "Financial Times" reporter that the losses caused by the company can only be supplemented by expanding new markets.
Difficult market
Nowadays, the price reduction of cars has become commonplace. In order to protect their interests, OEMs mostly choose to transfer the pressure to upstream suppliers. At the same time, if the vehicle sales volume is reduced, the automaker will also reduce the demand for components. At this time, some suppliers will appear to be "not enough to eat" by the automaker, and new products may not be available again.
Dongfeng Pump Industry encountered this situation this year. The overall sluggishness of the domestic truck industry, Minister Liu estimated that due to the fact that more than half of the plant's products supply Dongfeng, affected by the market, this year's sales can only maintain the level of last year.
"Financial Times" reporter learned that due to historical supply and demand relations and other reasons, China's upstream parts companies and downstream vehicle manufacturers, there are different degrees of debt, debt relationship.
As a vehicle manufacturer loses its market due to its old models, it sells the car prices that have been eliminated to its suppliers. The suppliers themselves were unlucky but they were helpless. Some companies were overwhelmed and even closed down.
An industry source pointed out that taking the product “top account†phenomenon is quite common in the automotive industry and is a common practice for downstream companies to pass on losses. When the upper reaches of the enterprise are really difficult, the mainframe factory is often abandoned.
It is reported that in Europe, the United States, Japan and other countries, the main engine plant and the parts and components companies basically established a long-term cooperative relationship. The main engine factory often regards the supporting company as a part of its own system. It not only actively invited them to participate in research and development, but also encountered in the parts and components companies. When difficulties arise, they also extend assistance and a win-win cooperation system between the two parties.
A person from FAW Jiefang Automobile Co., Ltd. told the Financial Times that as a vehicle company, they also expect the supply and demand sides to establish a win-win relationship. However, for now, it is sometimes upset to give up some suppliers.