Industry Overview
Automotive
China is now the second largest automotive market in the world,
trailing only the United States and Europe. In 2008, its
estimated that ten million new motor vehicles in China will be
sold. As of November 2007, China had already produced 8.8 million
vehicles, a 33.33% rise over 2006’s figures. There are
approximately 100 vehicle OEMs, with 40 producing passenger
vehicles. Major domestic firms include the China First Automobile
Group Corp. (FAW), Dongfeng Motor Corp. (DMC) and Shanghai
Automotive Industry (Group) Corp. (SAIC).
Alternative Fuel Vehicles
China encourages the development of clean and fuel efficient
vehicles in an effort to sustain continued growth of the
country’s automobile industry. By the end of 2007, China plans to
reduce the average fuel consumption per 100 km for all types of
vehicles by 10%. The proportion of vehicles burning alternative
fuel will be increased to help optimize the country’s energy
consumption. Priority will be given to facilitating the research
and development of electric and hybrid vehicles as well as
alternative fuel vehicles, especially CNG/LNG. Major cities like
Beijing and Shanghai already require Euro III emission standards.
Auto Parts
China has about 6000 automotive enterprises, which are scattered
in five sectors: motor vehicle manufacturing, vehicle refitting,
motorcycle production, auto engine production, and auto parts
manufacturing. All tiers of the industry are being driven by the
booming sales of the OEM sector. Nearly 80% of the revenue for
the auto parts and accessories market is through new vehicle
sales. However, revenue from after market is increasing rapidly.
Shanghai and its surrounding provinces (Zhejiang, Jiangsu, and Anhui) are the centers for component manufacturing, representing around 44% of national production. Shanghai is home to Shanghai General Motors, Delphi, Visteon, and other notable American automotive companies and, as such, provides a good starting point for U.S. automotive component exporters to begin to explore the Chinese market. Other major automotive centers in China include Guangzhou (South China), Chongqing (West China), and Changchun (North China).
China’s fulfillment of WTO requirements has helped drive new vehicle sales. As of July 1, 2006, China fulfilled its WTO requirements by lowering import tariffs for auto parts and accessories to 10% and import tariffs for new automobiles to 25%.
Used Motor Vehicles and Used/Refurbished Auto Parts
Although there are case-by-case exceptions for antiques and
diplomats, it is currently illegal to import used motor vehicles
into China. Refurbished heavy construction equipment can be
imported with a special permit. Used and refurbished auto parts
are not allowed to be imported into China.
Automotive After-Sales Products and Services
Although improvements have been made in this field in the past
decade, China's after-sales products and services still lag far
behind those of developed countries. However, WTO commitments
have brought about significant changes in the after-sale market.
China’s aftercare market now faces the following challenges:
- Establishing an information feedback system with end-users in order to improve service;
- Modernizing outdated sales systems;
- Increasing the competitiveness of domestic auto parts and accessories;
- Cracking down on counterfeit products.
Transportation Infrastucture
The Chinese Government is in the midst of a massive upgrade of
its transportation infrastructure. Until recently, China’s
economy was able to continue to grow despite deficiencies in
infrastructure development. This is no longer the case, and the
Chinese Government realizes that in order to keep their economy
moving forward, they need an efficient system in place to move
goods and people across this 9.326 billion sq. km. land mass.
According to World Bank statistics, goods lost due to poor or
obsolete transportation infrastructure amounted to one percent of
China's GDP as recently as the most current survey (mid 1990's).
Logistic costs account for 20% of a products price in China,
compared to 10% in the U.S.
Ports are being improved for greater use of China’s waterways, and airports are being improved across the country. All of these projects bring opportunities to U.S. construction equipment, engineering, and electronics and safety devices companies, especially for projects funded by the World Bank, Asian Development Bank, OECF, and similar multilateral lending agencies that use transparent bidding procedures.
Highways
In the past few years, China has been rapidly developing its
highway system. The investment for highway construction has
increased enormously from 2000 owing to increased government
attention. Improving infrastructure has facilitated the increased
use of automobiles. The government has added about 3,000 km of
expressway a year to the existing network. China has already
built a 30,000 km network of highways, second only to the U.S. in
total kilometers.
US$4.25 billion was invested in Beijing’s infrastructure in 2004, and another US$22 billion will be invested before the 2008 Olympics to improve Beijing’s traffic congestion issues.
Ports
China has sixteen major shipping ports with a capacity of over 50
million tons per year. Combined China’s total shipping capacity
is in excess of 2,890 million tons. By 2010, 35% of the world’s
shipping is expected to originate from China.
The Port of Shanghai is presently undergoing significant upgrades. Shanghai Model Port Alliance is responsible for many of the upgrades that are expected to make Shanghai’s port more automated, minimizing the loss of goods and time while helping Customs collect more accurate tariffs. If the Shanghai project is successful, there is interest in replicating the process in other Chinese ports.
Rails
Passenger rail traffic has priority over freight on the many
single-track rail lines across China, extending trips which
should last a few days to two weeks or more, and limiting
investment interests in all but a few coastal regions. Rail
tracks are now being doubled to alleviate freight train
conflicts.
U.S. Position in the Market
U.S. firms' advanced technology and experience make them very
competitive for projects using a transparent bidding system, such
as those funded by the World Bank, Asian Development Bank or
other multilateral funding sources. The massive upgrade of the
transportation infrastructure currently being carried out depends
a great deal upon available financing. In most cases,
locally-financed projects use local construction products and
services. Due to a lack of government funds, BOT (Build, Operate,
Transfer) project financing is a possibility for U.S. firms,
though these may not be viable business opportunities. Container
security equipment should have good prospects in the near future.
Market Research Reports
China Brief: New Energy Vehicles (Issue 1, Issue 2, Issue 3, Issue 4)
•East China Automotive Aftermarket
•Guangzhou targets 3 years to fuel its public fleets with LPG
•Mass Transit Projects in Chengdu and Chongqing, China
Major Shows
This section provides a listing of upcoming transportation-related events in China, including industry shows and trade missions. While FCS China is directly involved with some of these events, the majority here have no direct relationship with the FCS and are listed solely as a convenience to our users.
For more information, please contact the organizing group as listed in the event description. Verify the information before making any commitments - we are not responsible for accuracy of information or changes in events' schedules.
China International Auto Parts Expo
Date: November 12-15, 2008
Venue: New China International Exhibition Center
http://www.iapechina.com
China International Trade Fair for Auto Maintenance Technology
and Equipment, Auto Parts and Accessories
Date: Feb. 25-28, 2009
Venue: New China International Exhibition Center
http://www.auto-maintenance.com.cn/
Automechanika
Date: December 9-11, 2009
Venue: Shanghai New International Expo Center
http://www.automechanika-shanghai.com
Auto Shanghai 2009
Date: April 20-28
Venue: Shanghai New International Expo Center
http://autoshanghai.auto-fairs.com/en/leftnavigation/information
