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At the recently held "High-level Forum on China's Auto Parts Development Trends," Zhang Xiaoji, Vice President of the China Federation of Machinery Industry, provided a comprehensive overview of the development of the automobile and parts industry during the "10th Five-Year Plan" period. He also outlined his vision for the future, predicting that the auto component industry will move toward zero emissions and greater technological integration.
Zhang summarized the achievements of the "10th Five-Year Plan" using three key points. The first was that the three major automotive industries completed their goals three years ahead of schedule, with output nearly tripling over five years. China's local production rankings rose from eighth in the world in 2000 to third by the end of the plan period.
The second point highlighted three major transformations within the industry. First, the sector operated under market norms earlier than many other industries, with product output, pricing, and market orientation largely determined by market forces. Second, after years of effort, the industry transitioned from technology dependence to self-development. Third, auto trade evolved from being import-only to a more balanced import and export model.
Zhang noted that when China joined the WTO, the auto industry was seen as one of the most vulnerable sectors. However, in just five years, Chinese automakers fulfilled all their WTO commitments, marking a significant shift in confidence and capability.
Despite these achievements, he pointed out three areas needing improvement: limited independent R&D capabilities, lack of strong industry groups, and insufficient access to capital. He emphasized that relying solely on internal profits for growth is no longer viable in today’s fast-paced financial environment, urging companies to explore new forms of capital integration.
Innovation in the auto parts industry is crucial for the broader automotive sector. At the National Science and Technology Conference, General Secretary Hu Jintao set a goal for China to become an innovative country by 2020, which places higher demands on the automotive industry. According to the National Medium- and Long-Term Scientific and Technological Development Plan, equipment manufacturing and information industries are key to national competitiveness, with the auto industry playing a central role.
Zhang stressed that for the foreseeable future, the focus should be on absorbing, adapting, and innovating existing technologies. He emphasized that the innovation of the auto parts industry remains the foundation for the entire sector's independent development.
He outlined four key factors for China to transition from a large to a strong auto industry: independent R&D capabilities, a solid parts industry, support from related sectors, and a robust sales and service system. The parts industry, he argued, will play a critical role in future competition, especially as electric vehicles require new battery technologies and advanced braking systems, leading to a transformation in the components sector.
During the seminar, a participant asked about the path to grouping auto parts companies. Zhang explained that clustering involves two levels—both strategic and operational. True consolidation isn't about creating large conglomerates, but rather about achieving international competitiveness through efficient market segmentation and specialized development.
China currently has three types of auto parts clusters: those centered around main engine plants to improve logistics, those based on related components, and those focused on modular supply and system development to reduce costs. Zhang believed the third type holds the most potential for long-term growth and competitiveness in the Chinese auto parts industry.