Where is it difficult for local parts companies to support Korean companies?

“We have had many contacts with Beijing Hyundai. Many people including our deputy general and German officials have visited Beijing Hyundai. Beijing Hyundai has also visited our factory, but Beijing Hyundai has not chosen us yet. "A product of Nanjing Huade Spark Plug Co., Ltd.'s marketing department complained to reporters:" Companies like us who have a German background are difficult to match with Korean-funded companies, and parts companies that want to change the cost of soil want to enter. The difficulty of the supporting system of Korean-owned enterprises is self-evident."

For a long time, there have been many domestic parts and components companies complaining of difficulties in entering the Korean investment support system.

At present, the Korean auto industry has only one national enterprise, the Hyundai-Kia Group. In order to achieve better development, Hyundai-Kia Group must expand externally, and China has become the company's main strategic direction due to its huge market potential.

The main cooperation projects of Hyundai-Kia Group in China are Beijing Hyundai and Dongfeng Yueda Kia. Since the start of the Beijing Modern Project, Hyundai has encouraged its partners to jointly develop in China. Mando, Korea’s largest parts supplier, has always provided support for modernity, and Beijing Modern is no exception. The main components of Beijing Hyundai Engine Factory are provided by the wholly foreign-owned Korean factories such as Mobis. It is reported that there are currently more than 60 Tier 1 enterprises supporting Beijing Hyundai, of which about 90% have a background in foreign capital, and this is almost covered by Korean-funded or Sino-Korea joint ventures. Dongfeng Yueda KIA may be slightly better. At present, there are about 100 first-tier suppliers for Dongfeng Yueda Kia, of which there are nearly 20 local parts suppliers, but companies with a foreign investment background still account for about 80%, and most of them are also Korean-owned enterprises. .

Why is it so difficult for local parts companies to enter the Korean-funded system? Some experts believe that this has a lot to do with the supporting systems of Korean auto parts companies and OEMs. The model for complete vehicles and parts companies in South Korea is the “tower model”, which is a business relationship model based on subcontracting at the business level. The relationship between OEMs and parts factories is relatively close, and you have formed me among you. I have your special mode. General automobile manufacturers only contact a small number of first-tier suppliers, and they have a clear supporting relationship with the first-tier suppliers. The same kind of parts and components only requires an independent matching relationship with one or two companies.

Is this tower structure really making it difficult for non-Korean companies to enter their supporting systems? An industry insider who had worked for the Korean company Daewoo for seven years and who is very knowledgeable about Korean-owned companies, told reporters that unlike the strategy implemented in China, the proportion of Korean-owned automotive companies in Europe and the United States purchasing local parts is relatively large. .

“For example, Hyundai’s US factory in the United States purchases a large number of components from Delphi.” The industry source said, “In the overseas market, the original Daewoo is bigger than modern. The original Daewoo vehicle companies in Europe and the United States are also Extensive use of products manufactured by local non-Korean-owned parts and components companies."

When asked why the strategy implemented in China is different from other overseas markets, the industry source said: "Because the auto parts manufacturers' confidence in the European and American markets is not very strong, they follow the entire vehicle. There will not be a lot of spare parts companies from the factory to the local factory, and the cost will make the Korean-owned enterprises have to tilt to the local parts and components companies.However, China is different, Hyundai-Kia has a great deal of confidence in the Chinese market, its supporting zero The parts also have strong confidence. Therefore, there are also many parts and components companies that follow China's construction."

According to Mr. Chen Guangzu, an automotive expert, “It is difficult for local parts and components companies to enter Korean-funded enterprises. On the one hand, there is a big gap between the lean production capacity of some companies and foreign companies; on the other hand, the customary trust behavior of Korean-owned enterprises is different. There is a certain relationship.

After so many years of development, whether it is manufacturing processes or R & D capabilities, some parts and components companies in China have greatly improved, and these companies have the advantage of price. However, it is still very difficult for these companies to enter Beijing Hyundai and Dongfeng Yueda Kia.

“This has some relationship with the right to speak of the joint venture company.” Teng Bole, former deputy secretary-general of the China Automotive Industry Association, told reporters, “Since the joint venture has taken place, both parties have shared interests and the two parties should discuss the matter together. In the middle of this, we Don't forget about your surname. You must fight for it. This requires wisdom."

It is understood that in the modern management structure of Beijing, the chairman of the board is Xu Heyi of China and the general manager is Lu Qianwan of South Korea. The general manager consists of five headquarters, and the Korean company occupies three important core sectors of procurement, sales, and development planning. The Chinese occupy the management and production departments with no direct interest. Similarly, Hyundai Motor Co., Ltd. also controls the three critical departments of Dongfeng Yueda Kia's procurement, sales, and development planning. China also has only management and production departments left. It can be seen that in the two joint ventures, the purchasing power is not in the hands of the Chinese and it also determines that it is difficult for local parts and components companies to enter the procurement system of these two companies.

“Now, the profitability of Korean cars is still very large, and their cost pressures are not unbearable. However, as the competition increases, the pressure will increase, and their chances of using local parts will increase.” A car Analysts think.

At present, the cost of parts and components basically accounts for 60% to 70% of the total vehicle manufacturing cost. Although Beijing’s modern profits are still good, high procurement costs have always caused China to be dissatisfied. According to an insider from Beijing Hyundai, Beijing Hyundai has been preparing to expand its procurement of local parts and components companies.

“However, whether the key to entering the joint venture supporting system depends on our technical level, brand awareness, and service level.” Teng Bole believes that “focusing on the construction of a number of large-scale and powerful parts and components groups is to solve this problem. A good way out of a problem."

Tao Jun, Vice Minister of Purchasing Department of Dongfeng Yueda Kia, told the reporter: “The state must vigorously develop the self-owned brand vehicle company and drive the development of parts and components companies with vehicle companies. When the comprehensive strength of the component companies has been greatly improved, When the products are of good quality and at the same time there are price advantages, these companies will naturally come to you."

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